UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Andrew Hall

v. Case No. 16-cv-418-SM Opinion No.

Lorettann Gascard and Nikolas Gascard

O R D E R

Plaintiff prevailed in this civil art fraud case, and he

now seeks an award of reasonable attorney’s fees necessarily

incurred in vindicating his rights. Defendants object.

The plaintiff, Andrew Hall, bought a number of paintings

directly from defendant Nikolas Gascard, and a few paintings

from others that Nikolas put into the art market. Hall thought

the paintings he bought were works by the late artist Leon

Golub. He thought so primarily because Nikolas unequivocally

represented that the works he sold to Hall were by Golub and,

based on Nikolas’s representations, the other sellers also

represented that the works they sold were by Golub. The trial

evidence, however, was quite persuasive: the paintings purchased

by Hall were crude fakes. Leon Golub did not create them.

1 There was also some credible evidence pointing to defendant

Lorettann Gascard as the suspect most likely to have created the

fakes. Lorettann was an art history professor and artist, who

studied under Golub decades ago, and who claimed a long-standing

friendship with Golub before he died. But Hall’s counsel did

not (understandably) press the question of who created the

works, focusing instead on their inauthenticity and the

Gascards’ knowing and intentional involvement in selling them.

The defense was anemic, resting almost entirely on

defendants’ testimony and cross-examination of Hall’s art

expert. The Gascards recounted Lorettann’s intermittent

personal relationship with the artist and her interest in his

work; suggested that her former husband (Nikolas’s father) had

an interest in Golub’s work as well, and that perhaps he had

obtained the suspect paintings from the artist or from others;

suggested that perhaps his sister, Nikolas’s aunt, also

collected art to some extent and perhaps acquired some of the

Golub paintings from her brother, or from others. The aunt died

in Europe and, the Gascards claimed, she left the suspect

paintings at issue, and other ostensible Golubs (a total of 40

or 50 works), in her apartment closet, where the Gascards found

them when they went to settle her affairs. The aunt left her

estate to Nikolas. Nikolas’s father (then deceased) had also

2 left his estate to Nikolas. The “Golub works,” then, whether

belonging to the aunt or Nikolas’s father, were said to be part

of Nikolas’s inheritance.

The defendants testified that they brought the paintings to

New Hampshire from Europe when they returned home. They claimed

to have rolled them up and wheeled them on a cart through an

airport to a Lufthansa Airlines check-in counter, where the

airline graciously took charge of the rolled paintings, wrapped

them, and presumably put them in the plane’s cargo hold. The

paintings would have weighed approximately 250 pounds or so,

and, given the unfortunate circumstances surrounding the aunt’s

death and the delayed discovery of her body, the paintings were

impregnated with a noticeable stench. Yet, defendants insisted,

they experienced no difficulty transporting the paintings out of

Europe, then through U.S. Customs, and to their home in New

Hampshire.

Defendants said they thought (and still think) the works

were by Golub. They began liquidating the collection in a way

that would bring the best prices, i.e. a few at a time.

Plaintiff’s counsel methodically challenged every aspect of

defendants’ narrative, exposed many misrepresentations made

3 about the works’ provenance, and offered uncontradicted expert

opinion evidence that the works were crude fakes. The jury had

little difficulty in expeditiously rejecting the defense and

returning a verdict in Hall’s favor against Nikolas for fraud

and against both Nikolas and Lorettann for conspiracy to commit

fraud. Hall was awarded $465,000.00 in damages, the full amount

paid for the works.

Attorney’s Fees

This is a diversity of citizenship case in which New

Hampshire law applies. New Hampshire generally follows the

“American Rule” with respect to awards of attorney’s fees.

Under the American Rule parties to litigation pay their own

fees. Harkeem v. Adams,

(1977). “Underlying

the rule that the prevailing litigant is ordinarily not entitled

to collect his counsel fees from the loser is the principle that

no person should be penalized for merely defending or

prosecuting a lawsuit. An additional important consideration is

that the threat of having to pay an opponent’s costs might

unjustly deter those of limited resources from prosecuting or

defending suits.”

(citing Tau Chapter v. Durham,

(1972) and Fleischmann Distilling Corp. v. Maier

Brewing Co.,

(1967)); see also In the Matter

of Mallett and Mallett,

(2012).

4 The New Hampshire Supreme Court has, however, recognized

limited exceptions to the general rule. A court may award

attorney’s fees when specifically authorized by statute, or when

based upon an agreement between the parties, or when a

judicially-created common law exception to the general rule is

found applicable. Mallett,

. Here, plaintiff

seeks fees under the judicially recognized “bad faith

litigation” exception:

Under the bad faith litigation theory, an award of attorney’s fees is appropriate [when] one party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons, [when] the litigant’s conduct can be characterized as unreasonably obdurate or obstinate, and [when] it should have been unnecessary for the successful party to have brought the action.

Frost v. Comm’r, N.H. Banking Dep’t,

(2012)

(quotation omitted). That exception to the American Rule as

established by the New Hampshire Supreme Court, focuses on the

losing party’s litigation conduct; it is related to the conduct

giving rise to the litigation in this case in the sense that

interposing a frivolous defense would qualify as bad faith and

expose the losing party to an award of fees, in the discretion

of the trial court.

5 Essentially, Hall sees “bad faith” in the Gascards’

proffered defense, because, he argues, the defense was patently

unreasonable, that is, “without any reasonable basis in the

facts provable by evidence.” Harkeem,

; Keenan

v. Fearon,

(1988).

Certainly, any reasonable trial observer would likely have

noticed that the Gascards’ defense was weak and largely

unsupported by “hard evidence,” i.e. pertinent documents,

exhibits, or verified facts. There were, for example, no

receipts, checks, or paper trails of any sort associated with

the paintings at issue that might establish their origin, or

dates of creation, or dates of acquisition. There were no

export documents related to transportation of the paintings out

of Europe; no airline receipts, or bills; no personal travel

tickets; no customs documents or import duty receipts; nothing

tangible to show the works were, as the Gascards claimed, found

in Europe and brought to the United States. No defense art

expert offered an opinion to the effect that Leon Golub created

the works, or even may have created them. Nor did any

independent expert opine that a lay person — someone not an art

expert or Golub expert — could have reasonably believed, upon

examination, that Golub created the works. (Although the

evidence did disclose that Hall, a major Golub collector and

6 presumably one familiar with the fundamental characteristics of

Golub’s work, and at least two highly reputable art auction

houses, were apparently satisfied (initially at least) that the

paintings were created by Golub.) Defendants did offer what

appeared to be the aunt’s Last Will and Testament, which did

leave unspecified art (paintings) to Nikolas. The Will was

excluded at trial, under the Rules of Evidence, but with respect

to an attorney’s fees motion, it is mildly relevant in

suggesting at least some arguable support for the defense

narrative — i.e., that paintings were left to Nikolas by his

aunt, and were found in her closet.

Defendants, as they note, did prevail with respect to some

legal claims asserted by Hall, and avoided a minor damages

claim. But, in context, that is of little significance. With

respect to the essential substantive claim — art fraud — the

proffered defense was basically, “We acquired the works from

Nikolas’s deceased aunt; we thought (think) she acquired them

from the artist, or from her brother (Nikolas’s father), who we

think was a Golub collector, because he knew Lorettann studied

under Golub and appreciated his work, and because Lorettann had

given him a number of Golub works that she had salvaged when she

was a student; and, critically, we had no reason to think the

works were not authentic Golubs and, although titles for the

7 works were fabricated by Nikolas, and the works’ provenance was

otherwise misrepresented to facilitate sales, we still believe

the works to be authentic Golubs.” The validity of that general

defense necessarily turned on credibility of the witnesses, and

the totality of the factual circumstances as presented to the

jury.

While it might seem that an exception to the general

American Rule ought to be recognized in cases in which active

fraud is found by clear and convincing evidence, New Hampshire

has not created such a blanket rule for fraud (or any other)

cases. See e.g., Maguire v. Merrimack Mutual Ins. Co.,

(1990) (insurance fraud involving deliberate arson by owner

of a home followed by a fraudulent claim on the home insurance

policy does not necessarily command an award of fees). That is

to say, prevailing in a case asserting fraud does not itself

entitle a litigant to an award of attorney’s fees under New

Hampshire’s common law.

But, neither is an award

precluded. An award of fees under the recognized exceptions to

the general rule may be available, and always remains a matter

of discretion for the trial court.

The pertinent exception to the American Rule that might

warrant a fee award in this case relates to whether the

8 defendants’ litigation position was “patently unreasonable.”

See Keenan v. Fearon,

. Without doubt there will

be cases of fraud in which a proffered defense is exposed as

“patently unreasonable,” but this is not quite that case.

Here, the defendants’ litigation position was bereft of

objective supporting evidence, but it cannot be said, on this

record, that it was frivolous. The defendants’ testimony was

sufficiently coherent, and roughly consistent, in relating a

narrative that, if credited, would have been consistent with, at

least, a finding by the jury that they obtained the paintings

from the aunt’s closet, assumed they were Golubs, and were not

aware (nor should they have been aware) that the artwork was not

genuine, or, that they believed the art was authentic, and so

had no intent to defraud. That is, the jury could have found

that defendants were unsophisticated and uninformed sellers of

fake Golubs inherited from a relative with whom they had had

little contact over the years.

The outcome in this case, as noted, necessarily turned in

significant part on witness credibility, expert opinion

evidence, close examination of the representative works, and an

assessment of the totality of the circumstances presented to the

jury. That the defense story seemed stretched and doubtful,

9 that it was largely unsupported by objective evidence, and

seemed downright implausible in many respects, does not equate

to a “patently unreasonable” litigation posture within the

meaning of New Hampshire’s exceptions to the American Rule.

That the jury concluded, by clear and convincing evidence,

that defendants engaged in fraudulent conduct naturally gives

rise to a sense that the victim of that fraud ought to recover

attorney’s fees as well as compensatory damages. But more is

required under New Hampshire’s common law. The evidence in this

case was limited — pertinent records, or evidence of the absence

of records (like customs declarations), would no doubt be

difficult to come by. Such records, though, may have

definitively, or persuasively, exposed the defense as being

based not just on an implausible but potentially accurate story,

but on a plainly false one. A defense shown to be based on

false testimony would certainly qualify as a “patently

unreasonable” defense, and would likely compel the exercise of

discretion to award fees.

That is essentially what is being argued here of course —

that the defense narrative was plainly false, and so the

litigation conduct was in bad faith, the defense having been

offered without any reasonable basis in the facts provable by

10 evidence. But the trial record falls short of establishing more

than that defendants’ story was found by the jury to be not

credible in material respects, and, at minimum, that the jury

found they knew or should have known the works were inauthentic.

An adverse credibility determination is not equivalent to a

finding that the testimony was plainly false, and the record

evidence does not rise to the level necessary for the court to

declare it patently false with the requisite degree of

confidence.

Put another way, could a rational jury have credited

defendants’ narrative, and could it have found that defendants

believed the works to be authentic? Or, might a rational jury

have found that Hall, a collector of Golub’s work and a

sophisticated buyer, could not reasonably rely on Nikolas’s

provenance representations? Unlikely as to both, but, still,

perhaps. Accordingly, I cannot find, on this record, that

defendants interposed a “patently unreasonable” defense, and so

decline to award fees under New Hampshire’s bad faith litigation

exception to the American Rule. This case comes close perhaps,

but falls “on the non-fee-paying side of the line that

separates” weak defenses from patently unreasonable defenses

interposed “in bad faith, vexatiously, wantonly, or for

oppressive reasons.” Universal Am-Can, Ltd. v. CSI-Concrete

11 Systems, Inc.,

* 16

(D.N.H. Feb. 22,

2012) (citations and quotations omitted).

Conclusion

Plaintiff’s motion for award of attorney’s fees (doc. no.

113) is denied.

SO ORDERED.

____________________________ Steven J. McAuliffe United States District Judge

April 22, 2019

cc: Lawrence B. Gormley, Esq. Ted Poretz, Esq. Jeffrey Christensen, Esq. William B. Pribis, Esq.

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