## Facts

- From 1998 until Hannelore B. Schulhof’s death in 2012, Lisa Jacobs worked for Schulhof as a private curator and art consultant for the family’s art collection.
- On October 25, 2011, Michael P. Schulhof (acting for his mother) and Jacobs signed a written agreement (the “October agreement”) for Jacobs to locate a buyer for Jean-Michel Basquiat’s *Future Sciences Versus the Man*.
- The October agreement required a minimum sale price of $6 million and provided Jacobs a $50,000 fee; it also stated Jacobs was not to accept any payment from the buyer (cash or in kind) and imposed communication/approval limits on her solicitation of buyers and offers below $6 million.
- In November 2011, Jacobs spoke with art dealer Amy Wolf and stated the painting’s price was $6.5 million; Wolf agreed to buy at $6.5 million.
- Jacobs then emailed Michael Schulhof that she “was able to get the [buyer] up to 5.5 million,” and Michael agreed to accept $5.5 million.
- Jacobs said the buyer wanted anonymity and proposed structuring the sale as two transactions: (1) Michael would sell the painting to Jacobs for $5.5 million, less Jacobs’s $50,000 fee; then (2) Jacobs would sell to Wolf.
- The transactions closed as proposed. Jacobs resold to Wolf for $6.5 million and kept the difference (about $1.05 million when measured against what Jacobs paid net of her fee), without disclosing Wolf’s agreed price or Jacobs’s profit to Michael at the time.
- Hannelore Schulhof died in 2012 and Michael became executor. Michael learned later in 2012 that Wolf had paid $6.5 million and Jacobs had made the undisclosed profit.
- In 2013, Michael (as executor) sued Jacobs for breach of fiduciary duty, breach of contract, fraud, and restitutionary theories. The parties filed cross-motions for summary judgment.

## Issues

1. Whether Jacobs’s long-running curator/advisor role and the October agreement created a fiduciary relationship in connection with the Basquiat sale.
2. Whether Jacobs breached fiduciary duties and the October agreement by arranging a two-step sale, misrepresenting the available price, and keeping an undisclosed resale profit.
3. Whether Jacobs could rely on an alleged prior understanding (such as a “buyer’s premium”/dealer theory) to justify keeping the spread despite the October agreement’s compensation limits.
4. Whether Jacobs was entitled to summary judgment dismissing the action based on arguments concerning Michael Schulhof’s authority under a power of attorney and General Obligations Law § 5-1507.
5. Whether the estate was entitled, on summary judgment, to punitive damages and attorneys’ fees in addition to disgorgement/compensatory relief.

## Decision

- The Supreme Court, New York County (Ramos, J.), granted the estate’s motion for summary judgment in part, holding Jacobs liable based on her secret profit in the Basquiat transaction.
- The court concluded Jacobs owed fiduciary duties in the transaction and violated those duties, and also violated the October agreement’s restrictions, by failing to disclose the $6.5 million deal and by taking value from the buyer side through the undisclosed resale spread.
- The court awarded monetary relief measured by the undisclosed profit (about $1.05 million) plus appropriate interest.
- The court denied Jacobs’s cross-motion for summary judgment seeking dismissal, rejecting her arguments that she was merely acting as a dealer entitled to keep the spread and that alleged power-of-attorney/statutory defects warranted dismissal at the summary-judgment stage.
- The court denied summary judgment to the extent the estate sought punitive damages and attorneys’ fees.

## Legal Principles

- An agent or advisor who acts for a principal in a sale owes duties of loyalty and full disclosure and may not obtain secret profits from the transaction.
- Where a written agreement fixes the agent’s compensation and bars buyer-side payments (including “in kind” value), the agent cannot evade those limits by inserting herself as an intermediary and capturing an undisclosed resale spread.
- A claimed prior or separate compensation arrangement cannot be used to defeat or rewrite clear, transaction-specific terms of a later written agreement governing the same sale.
- Technical challenges to an owner’s representative authority do not automatically defeat claims where the defendant’s liability is established by the defendant’s own fiduciary misconduct and the governing written agreement.
- Punitive damages and attorneys’ fees require a distinct legal and evidentiary basis beyond ordinary compensatory relief for breach of fiduciary duty or contract.

## Conclusion

In *Schulhof v. Jacobs*, the trial court held that an art curator/advisor who agreed in writing to sell a Basquiat for a minimum price and a fixed fee, while taking nothing from the buyer, breached fiduciary and contractual obligations by misrepresenting the sale price, structuring a two-step transfer, and keeping an undisclosed resale profit; the court ordered disgorgement-based damages (with interest) but declined to award punitive damages or attorneys’ fees on summary judgment.


Schulhof v. Jacobs, 54 N.Y.S.3d 613 (2017)