Utah gallery joins Kinkade class-action suit

At least one Utah art gallery has joined a lawsuit against artist Thomas Kinkade and Media Arts Group Inc., the art publishing and marketing firm he founded.

In a statement released Wednesday, Michigan-based attorney Norman Yatooma announced that 15 gallery owners have joined the lawsuit. The galleries are, or were, located in Utah, Maryland, Virginia and Michigan.

The lawsuit, according to Yatooma's statement, alleges fraud, breach of contract and violations of franchise investment and antitrust laws. The allegations were, in part, that Media Arts:

• Required gallery owners to buy and sell artwork at set prices, while the company sold products via the Internet and other mass market outlets at prices often below the galleries' contracted prices.

• Pressured gallery owners to open galleries in markets that could not sustain them.

• Pressured gallery owners to purchase excessive or weak inventory.

Herb Montgomery, executive vice president and chief financial officer of Media Arts Group, told the Deseret Morning News that he had not seen the complaint and therefore could not comment on the allegations.

Yatooma could not be reached for comment about how many Utah galleries are involved in the suit, where it was filed or what the gallery owners are seeking.

However, Yatooma said in the statement, "The litigation against Media Arts is growing rapidly. Our office receives calls almost weekly from gallery owners across the country interested in joining our efforts. In addition, we anticipate filing two additional class action lawsuits, one on behalf of collectors of this artwork and one on behalf of shareholders of Media Arts."

Yatooma's firm also represents art dealers with similar claims who have filed a class-action lawsuit in Detroit. In total, there are reportedly 10 or more similar claims filed nationwide against Media Arts. The company has strongly denied similar allegations in news reports regarding other cases, stating in response to a California case that gallery owners were the victims not of fraud, but a down economy or faulty business practices.

Kinkade, widely known as "the painter of light," once owned about 35 percent of Media Arts Group. On Oct. 31, the company announced it had reached a definitive agreement with the artist to take the company private.

As part of the transaction, which is expected to be complete in late 2003 or early 2004, holders of Media Arts Group's outstanding stock will receive $4 per share in cash for their shares. Media Arts will become a privately held company, wholly owned by Kinkade and his affiliates. The transaction is subject to the usual regulatory approvals.

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E-mail: jnii@desnews.com