(CN) – Sam Zell’s insurance company claims a Los Angeles art dealer sold three consigned paintings without Zell’s permission for $5.8 million – a Balthus and two Fernand Legers – then spent the money, so he can’t repay the real estate tycoon.
In a $5.8 million demand in Los Angeles Superior Court, Chubb Indemnity Insurance sued David Tunkl and his art gallery Worldwide Masterpiece. Chubb sued as subrogee of Samuel and Helen Zell and The Samuel Zell Revocable Trust.
Zell is the Chicago real estate tycoon whose heavily leveraged buyout of the Tribune Co. led to massive layoffs, bankruptcy and a cascade of lawsuits for the once-proud newspaper chain, whose properties include the Los Angeles Times.
Represented by Cozen O’Connor, Chubb claims the Zells delivered three pieces of art to Tunkl and Worldwide in 2007 and 2008, “to solicit and convey offers for sale to the Zells for their consideration and approval or rejection.”
The works were Balthus’ “The Cat With Mirror III,” which was appraised at $5 million; Leger’s “Study for the Tugboat,” which the Zell Trust had bought for $375,000; and Leger’s “Mona Lisa with Keys (First State),” which the Trust bought for $900,000.
The insurer says that in June 2009, “Tunkl confessed to Mr. and Mrs. Zell that he had sold the three artworks without the Zells’ authority to sell the artworks, and that the updates about interested buyers that he previously had given the Zells had been false.
“Tunkl further acknowledged to the Zells that he had spent the money he had received from the sale of the three subject artworks, and had no funds remaining at that time with which to pay the Zells.”
Chubb says it forked over $5,775,000 to the Zells, under the terms of its policy. Now it wants Tunkl and Worldwide to pony up.
Chubb seeks $5,775,000 plus costs, for conversion and breach of contract.