Hajime Sorayama v. Robert Bane and Tamara Bane Gallery

In 2007, Japanese artist Hajime Sorayama obtained a nearly $2-million judgment, including $1 million in punitive damages, against Robert S. Bane, his publishing company, Robert Bane Ltd., and his gallery, the Tamara Bane Gallery. In 2009, a federal bankrupcy court refused to allow Bane to discharge the debt, citing a pattern of intentional and pervasive fraud perpetrated against Sorayama.

The Tamara Bane Gallery (TBG) was an important gallery that helped create a substantial market for so-called "pin-up" art. It opened its doors on Melrose Avenue in Los Angeles in the late 1980s with a show by artist Olivia de Bernardinis; and later it moved to chicer surroundings on Beverly Drive. Throughout the 90s, the gallery specialized in, but was not limited to, pin-up art and artists. Artists as diverse as Mark Ryden, Robert Williams, Eyvind Earle and Aldo Luongo were given one-person shows at the gallery.

TBG was and is solely owned by Robert Bane and his wife, Tamara Feuer-Bane. Mr. Bane's art publishing company, Robert Bane, Ltd. also conducted business through the gallery, as well as through the names Exotica and Robert Bane Editions.

TBG and Bane began their relationship with Japanese artist Hajime Sorayama in 1994, when Sorayama was already a star on the international art scene. By 1995, Sorayama was a regular contributor to Penthouse magazine and his lithographic and glicee editions were being sold in the United States exclusively through TBG and Bane. His shows at Tamara Bane Gallery were well attended. As the new century began, however, the relationship went awry.

All of the facts recounted here are the conclusions and determinations of United States federal judges in two different litigations, one in the United States District Court, Central District of California, and the other in the United States Bankruptcy Court sitting in Los Angeles.

The facts in brief

Sorayama made three different contracts with Bane in the 1990s, the last one being in 1999. In October 2000, Sorayama's agent notified Bane that she wished to conduct a physical audit of the paintings provided by Sorayama at the next scheduled show at TBG. The gallery promptly cancelled, however, and the audit was held the following April.

As a result of the audit, Sorayama’s agent discovered that eight works of art were missing and unaccounted for. As the court stated, "Bane offered different explanations for the loss: that they were in a warehouse, that they were stored in a garage, that [they were lost or stolen and] that he would make an insurance claim for them." As Sorayama discovered during Bane’s deposition in federal court, Bane had actually sold the work in January 2000.

In the meantime, with the downturn in the market in late 2001, Bane returned most of Sorayama's original paintings, but advised Sorayama that he wished to "retain" 16 of them for sale. In fact, as revealed in the litigation, most or all of those had also already been sold a year or two earlier. The litigation also uncovered the fact that a "bulk" sale of 9 works that Bane claimed he made to a single collector at a discount, wasn't a bulk sale at all, but separate sales of Sorayama's work at full price.

When Sorayama’s contract with Bane expired in March, 2002, he did not renew it, but asked Bane to pay him what he was owed and to return any remaining work. Months of negotiation ensued.

On September 9, 2002, Robert Bane, Ltd, Inc. d/b/a Tamara Bane Gallery, Inc. / Exotica agreed to pay Sorayama $148,800 as the balance due for the 24 paintings whose sale Bane had kept hidden from Sorayama, as well as the 9 works which Bane had lied about being a "bulk" sale. Sorayama entered into this agreement without knowing that he had been defrauded.

Bane made irregular payments under the September 9, 2002 agreement and a year later, in September, 2003, asked Sorayama to take lithographs and glicees in partial settlement of the debt. Sorayama agreed to take 830 pieces (representing 44 different works) for a credit of $35,000. However, by January 2004, Bane still owed more than $93,000 to Sorayama.

Then Sorayama discovered that Bane was auctioning off scores of his limited editions on eBay and other websites for $100 or less. In the Court's phrasing, he was "dumping" the work, all the while falsely claiming that he was still Sorayama's exclusive publisher. Dumping the work online had two direct consequences: first, it depressed prices for Sorayama's work, and second, it ensured that Sorayama was unable to sell more than a handful of the limited edition pieces he had taken in exchange for the $35,000 credit. At this point Sorayama had no choice but to sue.

In September of 2007, after a four-day non-jury trial before United States District Judge Florence-Marie Cooper, in the Central District of California, verdict was reached against Robert Bane, Ltd., Robert S. Bane, individually, Tamara Bane Gallery, and Exotica. (The latter two were designated in the case as businesses of "unknown type.") Recognizing that Bane had acted intentionally to harm Sorayama and the market for his work, the judge not only awarded Sorayama compensatory damages of over $960,000, but also imposed punitive damages of $1,000,000 against Bane personally. The following is a detailed account of the District Court's judgment.

Breach of Contract against Robert Bane Ltd.

The judge found Robert Bane Ltd., trading through the Tamara Bane Gallery and Exotica, guilty of breach of contract for failing to pay the $93,280 owed to Sorayama under the September 9, 2002 agreement. With interest up to August 27, 2007 (the date of the judgment), the total amount came to $148,949.68, but interest continues to accrue.

==Conversion against Bane personally--

The Court ruled that Bane personally committed the tort of conversion, a civil analog to theft, when he sold off 33 of Sorayama's paintings and then pretended that he didn’t know where they were while pocketing the money. Bane argued that there was no harm done because he was willing to pay Sorayama his share of the proceeds of sale, but the court correctly decided that the proper remedy was payment to Sorayama of the full value of the work, not just the artist's share. Because Bane was found to have acted in bad faith – willfully and maliciously, in fact – and not the result of honest mistake, allowing Bane to keep any part of the money he tried to keep for himself would have wrongly rewarded him for his misdeeds.

Breach of Fiduciary Duty against Robert Bane Ltd.

Under the California Civil Code Section 1738.6 et seq., “a consignee of art is deemed a trustee of the proceeds of sale.” Under this provision, Robert Bane, Ltd., to whom Sorayama consigned his artwork under contract, was determined to be a fiduciary. While Bane personally “converted” the artworks for his own benefit, Bane's company breached its fiduciary by hiding the sales from Sorayama. On this cause of action, the company was held to be jointly and severally liable for the same $388,000 assessed against Bane personally on the conversion count.

Intentional Interference With Prospective Economic Advantage

At the time that Sorayama was negotiating with Bane to take lithographs and glicees in exchange for a credit against Bane's debt, Bane pointed out (in a letter) that the 2,041 pieces in his possession had a market value of more than $1 million. Sorayama, however, was an artist, not an art retailer, so he agreed to take only 830 pieces for a credit of $35,000. Then he would think about the rest.

For reasons known only to Bane, Bane and his co-defendants began dumping "scores of [Sorayama's] limited edition reproductions" at cut-rate prices on eBay and other websites, sometimes at less than a hundred dollars. Although Bane denied doing this, the court found that the documentary evidence "clearly establish[ed] that he did so." Furthermore, Bane knew he would irreparably damage the market for Sorayama's work:

The state of the evidence is clear: plaintiff reasonably expected future economic benefit as a result of his relationship with his many international customers. Defendants, as plaintiffs American art publisher, knew of that relationship and its anticipated economic benefit to plaintiff. Defendants' decision to flood the market with cut-rate reproductions was clearly designed to disrupt that relationship, and did so. Plaintiff experienced great difficulty selling the reproductions in his possession, because of their availability on eBay.

As mentioned above, Sorayama was unable to obtain a fair price for the 830 pieces for which he accepted the $35,000 credit. But far worse than that was what Bane did to the market for Sorayama’s work in general. As the court found:

There has been a marked decline in such income since Robert Bane Ltd. devalued the product through eBay sales.

The finding of intentional interference was rendered against all the defendants in the sum of $425,000, estimated by the judge to be Sorayama's loss of income occasioned by the tortious actions of Bane and his co-defendants.

Punitive Damages for Willful and Malicious Injury

The court awarded Sorayama the sum of $1,000,000 against Bane personally because it found Bane's behavior toward Sorayama to be outrageous: both willful and malicious. In the judge's words:

The record is replete with misrepresentations made by Bane to plaintiff, on which plaintiff relied to his detriment. Paintings were sold without payment to plaintiff, then lies were told to cover up the sales. The shifting of blame, reinvention of facts and dissembling went on for years, while Bane repeatedly said he was trying to do what was best for Mr. Sorayama and was making every effort to make good on his obligations. The evidence establishes clearly and convincingly that Bane perpetrated a continuing fraud against Mr. Sorayama, whose business and reputation have suffered as a result. Punitive damages are imposed on Bane personally and in favor of plaintiff in the sum of $1,000,000.

Proceedings in Bankruptcy Court

Following the judgment, Bane sought the protection of the United States Bankruptcy Court. Although some proceedings are still ongoing, he has found little sympathy there. In a summary proceeding, the court ruled that Bane's bankruptcy would not discharge his personal debt to Sorayama, which as of February 2008 amounted to $1,813,000 plus accrued and accruing interest. When Bane asked the court to stay Sorayama's efforts to enforce the judgment pending appeal, the court refused, reminding the defendant that the District Court had found a pervasive pattern of fraud on Bane's part. Simply put, the Court said, it would be giving Bane the chance to hide assets and divert its inventory of artwork:

[I]mposing a stay may give the Defendant further opportunity to dispose of or secret assets that may remain to satisfy the Plaintiff’s judgment now that he knows for sure that there’s a judgment…

The Bankruptcy judge further ruled that the circumstances of Bane's selling off Sorayama paintings and then hiding the proceeds from Sorayama constituted embezzlement under the bankruptcy law.

Injunctions Against Bane et al.

Pursuant to the District Court ruling, Bane and the other defendants are prohibited from selling or offering for sale any Sorayama work for less than a minimum market value of $300 for lithographic prints and a $700 for giclees. Any sale by Bane, whether through his own company or through third parties, may be punished by contempt of court and additional sanctions. Furthermore, Bane and the other defendants are prohibited from stating that they are or ever were Sorayama's exclusive publisher of Sorayama.

Robert Bane / Tamara Bane Gallery 2009

Today Robert Bane is currently devoted to a single artist, Fabian Perez, who is also Bane’s partner. Together they operate under the names Robert Bane Fine Art, Inc., Tamara Bane Gallery of Fine Art and Fabian Perez Art Publishing LLC.