Gibson Dunn punished for meritless lawsuit

by Ted Frank on February 9, 2005

Steve Morton, heir to the salt fortune, asked Steve Seltzer to evaluate the early 20th-century painting “Lassoing a Longhorn”, thought to be a C.M. Russell; Seltzer instead identified it as the work of a less famous artist, his own grandfather, the Russell contemporary O.C. Seltzer. This meant the painting’s value was not about $650-800 thousand, but perhaps a tenth of that. So Morton hired the big law firm Gibson Dunn & Crutcher, and sued Seltzer in federal court for the difference plus punitive damages. Unfortunately, though Morton did have evidence the Russell signature wasn’t altered, he couldn’t find any experts who backed his theory of the painting’s provenance, while Seltzer lined up nine affidavits that supported his conclusion. Morton dropped the lawsuit, and Seltzer then sued Morton, the law firm, and the apparently-now-retired lawyer, Dennis Gladwell. A Montana state court jury found malicious prosecution, and awarded $21 million in damages, based in part on Gibson Dunn’s earnings. The damages award seems improper (it’s punishing the law firm for being large, rather than for wrongdoing); one hopes it is reduced to something in line with the actual damages to Seltzer–legal fees, any economic damages from the brief loss in reputation (though Seltzer doesn’t charge for his authentications), plus perhaps some reasonable non-economic damages for the stress of litigation.

But one would have more sympathy for the defendants if they hadn’t been the first to be using litigation to make unreasonable demands; if all Morton and his attorneys wanted, as they claimed, was to clear the painting’s title, he didn’t need to seek punitive damages against Seltzer. The defendants will appeal. (Kathleen Schultz, “Jury awards artist $21 million”, Great Falls Tribune, Feb. 8; Kathleen A. Schultz, “Seltzer jury may receive case today”, Great Falls Tribune, Feb. 4; Kathleen A. Schultz, “Art collector defends position in malicious prosecution trial”, Great Falls Tribune, Feb. 3; Kathleen A. Schultz, “Seltzer outlines personal suffering in civil suit”, Great Falls Tribune, Feb. 2; David Hewett, “Owners Sue Art Expert, Art Expert Sues Owners”, Maine Antique Digest, Oct. 2003).