What is Nataros v. Fine Arts Gallery of Scottsdale

Nataros v. Fine Arts Gallery of Scottsdale is a court case that challenged assumptions about appraisals and fair market value involving works of art. In the 1980 case, the plaintiff – an art buyer – accused an auction house Fine Arts Gallery of Scottsdale of consumer fraud, negligent misrepresentation or common law fraud because items he purchased were later appraised by a third party at values far lower than the ones estimated by a gallery salesman. An expert testified that the terms "auction value" and "fair market value" are synonymous and represent the price that an will item bring at auction among a group of expert dealers. Competing bidders can serve to drive up prices in an auction which can skew prices higher, the expert added. The court decided in favor of the defendant in that there was no evidence of an improper auction or negligent misrepresentation of fair market value of the items.

Breaking Down Nataros v. Fine Arts Gallery of Scottsdale

In January, 1973, the Fine Arts Gallery advertised an auction containing furnishings from an estate and jewelry from another deceased individual. The auction was originally scheduled to be held at the private home from which the estate items came, but was then moved to a commercial location in Scottsdale, Arizona. Frank and Anna Nataros, the plaintiffs in the case, purchased numerous items over the course of a few days based on values provided by Allen Goald, a sales person at the Fine Arts Gallery. The total cost of all of their purchases totaled over $570,000 and included paintings, silver pieces and jewelry.

Nataros v. Fine Arts Gallery of Scottsdale: The Auction and Dispute

The day after the auction closed, Mr. Nataros stopped payments on the checks written for all of the items. After some discussion, the sale was canceled on some of the pieces of jewelry and a new check was issued $286,777 and the gallery provided written appraisals done in-house for the remaining items. Mr. Nataros discovered the items he purchased were not from the estate listed in large print in the newspaper ad, but rather from a New York art dealer, which was mentioned in smaller print reading, "Note: Due to Commitments Prior to the Contractual Arrangements for the Sale of McCune Items, Other Fine Collections Will Be Included in This Sale."

A year later, Mr. Nataros had the items in question appraised by Sotheby, Parke Bernet, and the appraisal values were much lower than what Mr. Nataros had paid and what Mr. Goald had said would be a reasonable price. As a result, Mr. Nataros filed suit against the Fine Arts Gallery of Scottsdale claiming consumer fraud, negligent misrepresentation and common law fraud. When the court ruled in favor of the gallery, the plaintiff appealed and the gallery filed a counterclaim seeking damages for slander and libel.

Nataros v. Fine Arts Gallery of Scottsdale: The Verdict

The lawsuit reached the Arizona court of appeals, where the court ultimately found for the defendants and dismissed their counterclaim. The plaintiffs were also ordered to pay court costs. This case is considered a landmark case in the art world, as it demonstrates how buyers believing they paid too much for something face an uphill battle when it comes to winning a claim against a seller, and that an item ultimately having a lower resale value does not automatically mean the initial estimated value was incorrect.