by David Walker

A New York State Supreme Court judge has cleared the way for a trial on claims against Getty Images by Art Capital Group, the company that loaned photographer Annie Leibovitz $24 million last year. ACG has alleged that Getty violated two binding legal contracts when the agency made a $1.1 million deal with the photographer last spring to represent her for a series of assignments.

Leibovitz put up her archives (prints and negatives) as well as her studio and two residences as collateral in exchange for a $24 million loan. ACG told her it would probably have to sell some or all of that collateral to recoup the money by the time the loan comes due on September 8, 2009. ACG also retained the right under the loan agreement to act as Leibovitz's exclusive agent until 2011.

This past spring, Getty entered discussions with ACG about buying the archive. Talks abruptly ended after Getty allegedly offered $15 million for an archive that ACG valued at more than $50 million, according to details that have just emerged in court papers. Around the same time, Getty cut the $1.1 million deal with Leibovitz to hire her out for eight assignments over the next two years.

ACG is now suing both Leibovitz and Getty separately. The claim against Leibovitz  is for her alleged refusal to cooperate with ACG's efforts to sell her property. She has denied those claims.

The claim against Getty, meanwhile, has been sealed from public view. But a preliminary ruling in that case, posted yesterday by cityfile.com, summarizes what the claim is about. It also sheds some light on what has been going on behind the scenes.

In a nutshell, ACG alleged that Getty signed a confidentiality agreement last February to discuss the acquisition of Leibovitz’s collection. Getty then allegedly used the information—in violation of the confidentiality agreement—to make the side deal to represent Leibovitz. According to the preliminary ruling, ACG alleged that Getty paid Leibovitz $1.1 to strike the side deal with her, knowing that she would need $1 million a week later to make a loan payment to ACG.

In addition to suing Getty for violating the confidentiality agreement, ACG sued Getty on the grounds that its representation deal with Leibovitz violated her loan agreement with ACG—specifically the part that gives ACG exclusive rights to represent her.

In the preliminary ruling, the New York Supreme Court judge rejected Getty’s motion to throw out those claims, clearing the way for trial.

But the court rejected other claims by ACG. One was a claim for fraud. ACG alleged that Getty feigned interest in buying the Leibovitz archive, and then used the confidential information it obtained to "secretly reach out directly" to Leibovitz, according to the preliminary ruling. But the judge concluded that ACG offered insufficient evidence to pursue that claim at trial.

Another unsuccessful claim was that Getty harmed ACG by scaring away another potential buyer of the Leibovitz archive when Getty made (and announced) it’s side deal with Leibovitz to represent her for the eight assignments. But that claim was rejected because ACG didn't provide enough specific information about the deal that allegedly fell through.

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