Gary Holloway $18,000 Onboard Auction Items Worth Only $1000?

Gary Holloway

$18,000 Onboard Auction Items Worth Only $1000?

Cruise Artwork Needs More Investigation Than Cruise Allows

On Cruise Bruise, we see alot of cases that turned sour just because the fine print was not read. Normally, these are cases about refunds, insurance, medical facilities and so forth.

Just as in the case of medical malpractice onboard, the cruise lines have language that says they are in no way affiliated with the auction, and can not be held responsible for any problems between the auction house and the passengers.

We rarely get a case that involves losses in the tens of thousands of dollars. Then, there is the case of Gary Holloway. If it was only Holloway, it would seem like a fluke that his man got taken for a ride, but it doesn't end there.

Cruise ship passengers beware. A cruise ship is not the place to buy artwork on the fly, unless you are extremely savy, and very much sober.

Last June Gary and wife Olga spent $17,836 on three limited-edition prints by Rembrandt van Rijn, plus one by Dali while on their Caribbean cruise. The auction was held by Park West at Sea auctions.

The artwork was backed by appraisals and letters of authenticity. If Holloway had read the certificate of authenticity, he would have learned that it does not apply to guarantees about the work's title, lot size, rarity, provenance or importance. As well, had he inspected the appraisal, he would have seen that Park West "assumes no liability for claims that our appraisal is inaccurate."

The works, including Divine Comedy - Paradise 26, showed a total "retail replacement price" of about $24,000.

But, what Holloway didn't know, though it was in the fine print, is the appraisals of the artwork are not guaranteed by Park West.

The disclaimer on the auction invoice says "No verbal agreements or representations (by Park West agents) shall be of any force or effect unless set forth in writing."

While many consider this language a formality, some legal text, that is not really applicable between two honest parties, in the case of the artwork, it should have been taken at face value, as a warning.

Park West Gallery director Morris Shapiro says, "No one can say they weren't informed of the rules." This is true, but then again, passengers are on a cruise ship, drinking champagne DURING an auction, and may not fully understand the meaning of that fine print.

Some art appraisers use the words "caveat emptor" (buyer beware) when discussing "land and sea auctions" for tourists. They say unsophisticated vacationers can get caught up in a buying frenzy conducted with free booze and a limited opportunity to do research. But, this indicates the buyers are not savy, and that is not the case in some instances.

Jim and Julie Russell took a cruise to the Cayman Islands last spring. He met up with Holloway at a land auction attended by Holloway for the purpose of attaining a refund for the over-priced artwork he purchased.

Russell is a savy art collector. "My business does approximately $50 million in sales a year," said Russell, who runs a Nevada steel company. "I do extensive research on every other project I'm involved with, and this one I just didn't."

Park West agents provided guidance to Russell, pointing out a Jules Cheret chalk drawing as the "steal of the auction." Its list value was $34,500. Bidding started at $24,700. "I said, 'OK,' and they immediately hit the hammer," Russell recalls. "Within like a breath."

It looked like a nearly $10,000 discount. The next day the Russells began surfing the Web. That is when they discovered that the Cheret piece had been bought by Park West from another gallery months earlier for $2,000.

Bernard Ewell, a Dali specialist who does authentication work for Park West, said the company's appraisals are not independent and he perceives them as high.

Ewell said people who buy art to make money are misguided because nearly all pieces decline in value after the first purchase. Asked about cruise-ship auctions, he said: "Just be warned. ... Almost invariably, the prices paid to Park West are higher than in other venues."

CLASS ACTION LAWSUIT

A New Jersey class action lawsuit claims that the auctions are shilled heavily, and cruise ship passengers are being robbed blind by ficitional bidders shoving the price beyond what it should be.

On a voyage five years ago, the civil complaint alleges, art buyer Alan Beegal detected the practice.

"They were shills that weren't even there," contends Ross Begelman, attorney for the plaintiffs. "The auctioneers just pointed at the chandelier or pointed at the crowd."

The lawsuit alleges that the practice continued at subsequent auctions, meaning each new round of patrons was bidding based on artificially inflated prices from prior auctions. Because of that, Begelman estimates, there are 250,000 to 1 million people who may qualify as plaintiffs.

Shapiro of Park West said the civil complaint is "absurd." Burlington, the Park West lawyer, said the class-action certification by the court is under appeal.

Defendants, two affiliated corporations conducting art auctions on cruise ships, appealed the order of the Superior Court of New Jersey, Law Division, Burlington County, which certified the putative class of plaintiff bidders. Plaintiffs had brought a fraud suit against defendants, claiming that defendants inflated the prices of the art through fraudulent bidding practices.

The court reversed the order certifying the class as an abuse of the trial court's discretion upon concluding that the difficulties likely to be encountered in the management of the case as a class action due to the required application of the governing law of each plaintiffs' state of residence precluded certification. The case was remanded to the trial court for further proceedings consistent with the court's opinion.

Is An Onboard Auction Right For You?

Park West says they have had 1 million clients since 1969, they hold auctions on about 70 cruise ships, which include Royal Caribbean Cruise Lines, and very few are unhappy, requesting a refund. In the event a refund is requested, very few passengers get one. In 2006, they received 30 letters of complaint, and only gave a refund to 10. Jim Russell was one of the few.

The question then comes to mind, if a passenger is under the influence of alcohol, in a state of diminished capacity, can they be bound by a legal contract entered into, while in that state? Beyond that, is it ethical to ply passengers with liquor, knowing that they are about to enter into a legal contract? The short answer is the casinos do it every day, and it is perfectly legal. This puts onboard auctions in the same boat as casino gambling, and should be seriously considered.

The auction is entertaining, and should end at that. What any one passenger is willing to pay for that particular onboard entertainment, should be based on their net worth, not on impulsiveness or any stated or implied value of the artwork.