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Washington Lawyer

Legal Spectator: Buyer Beware

From Washington Lawyer, April 2004

By Jacob A. Stein

spectator An experienced negotiator does not wait until there is a dispute. He anticipates disputes and sets traps for his adversary. One of the traps is to declare that something is nonnegotiable. This creates the belief that the something has unique value.

A rug dealer sees a customer look at a carpet, walk away, and later casually ask, “What is the price on that rug over there?” The rug dealer is trained to look for the glint in the eye that says, I must have that carpet. If the glint is there, he tells the customer the carpet is not for sale. Nonnegotiable. The price is doubled.

There are husbands who foresee trouble before the wife is aware that things are not going well. Let us say the husband wants to keep the green racing sports car. He tells his wife that he will never give up his right to use the beach house. It is nonnegotiable. Eventually he gives in. He gives up his right to use the beach house but he gets the sports car.

Recently there appeared in the newspapers the obituary of a woman we’ll call Helen. She lived a colorful life. From small beginnings she became famous. She married a wealthy man we’ll call William. He was an art collector of museum-quality paintings. William, at a time when Helen thought the marriage was going well, had fallen in love with someone else. During these good times the husband identified a Utrillo as the painting in his collection he would never part with, even if he had to sell everything else.

A year later William’s attentions to the other woman became public. A nasty divorce case followed. There were day and night negotiations between the lawyers. Finally the outlines of a settlement were reached. It was then that Helen decided to take charge. She instructed her lawyer to tell the other side that she wanted the Utrillo. She must teach him a lesson. This was one time when he was not going to get his way.

The demand for the Utrillo produced a deadlock. William would not part with it. He would rather go to court. Helen’s lawyer urged her to give up on the Utrillo and demand another painting. She could probably get a painting of much greater value. What was on the table was more than she would get if a judge were to decide the case.

Helen rejected her lawyer’s advice. It was a matter of principle. If the case had to go to court, so be it.

After much discussion her husband surrendered. Helen got the Utrillo. She had the satisfaction of seeing her husband give up something he never wanted to part with.

Years later, when William died, the IRS reevaluated his estate, including his art collection and the Utrillo. The experts came to her apartment and eyeballed it. They left and said they needed a Utrillo expert. Utrillos are easy to copy. A narrow, winding Parisian city street with buildings on each side. There are many fake Utrillos around. The experts filed their report. The Utrillo is a really good fake.

Helen consults a lawyer friend who knows her well and also knew William. What should she do? She is angry. She has been defrauded. The lawyer reviews the property settlement. As he expected, it contains the New York waiver clause. She agreed in writing to waive any claims that she was fraudulently induced to sign the agreement, and also agreed to waive any claims that she was fraudulently induced to execute a contract that waived the fraudulent inducement claim. They know how to do these things in New York City.

Even if she got by the New York waiver, she could not prove William knew the Utrillo was a fake. Her lawyer said, “Helen, you and I know you knew William was a fake and a fraud. You knew that when you married him. You wanted something he had, a high-living chauffeur-driven lifestyle. You got it, and when it was over you got a good settlement and the Miami beach house. There is a doctrine in law that says buyer beware.

“Furthermore, in a fraud case against the estate, the defense would be that you were contributorily negligent. You knew you were dealing with a con man. You should not have accepted at face value anything he said. Nobody else who knew him would.

“I do not want to be drawn into a long discussion of who is and who is not a fraud. As far as frauds go, I want you to know I have been practicing law for 50 years obliged to convince people that my client of the moment is telling the truth. A half century of renting myself out at high hourly rates may have turned me into something of a fraud. I hope not, but the circumstantial case against me is pretty strong.”

The lawyer encouraged Helen to get another Utrillo opinion. Many so-called art experts are themselves fakes. The best proof of that is the Han van Meegeren case. He was the Dutch painter who, after the war, was charged with selling to Adolph Hitler’s cohort, Hermann Goering, a Vermeer. The Dutch charged van Meegeren with selling a national treasure to a Nazi. He faced the death penalty. Van Meegeren admitted he sold the painting to Goering, but he said he tricked him. The Vermeer is a forgery. And what’s more, van Meegeren is the forger.

The prosecutor was not buying it. He had the leading Vermeer expert authenticate the painting. Van Meegeren offered to prove two things. First, the Vermeer expert is a fraud, and second, he, van Meegeren, can paint a Vermeer.

Van Meegeren demanded that the prosecutor suspend the prosecution and deliver to him paints, brushes, turpentine, and other requirements. Van Meegeren, in full view of the prosecutor and the expert, painted a Vermeer. The Vermeer expert was discredited. Van Meegeren pleaded guilty to the lesser crime of forgery and was sentenced only to a year. He died shortly after the trial.

Helen sold the Utrillo to an expert, who resold it.

Jacob A. Stein can be reached by e-mail at jstein@steinmitchell.com.