Ruling favors Thomas Kinkade franchisee gallery owners
LOS ANGELES – An arbitration panel has awarded $860,000 to two former Thomas Kinkade Signature Gallery owners who accused the so-called “Painter of Light” and his company of business fraud.
The arbitrators in a 2-1 ruling Thursday found that Kinkade’s Media Arts Group and one of its executives, Richard F. Barnett, “failed to disclose material information” that would have dissuaded Karen Hazlewood and Jeffrey Spinello from investing $122,000 to open the first of their two Virginia galleries in 1999.
The panel did not single out Kinkade in its finding of fraud.
The American Arbitration Association ruling also found that Kinkade and other company officials used the artist’s Christian-oriented themes to create “a certain religious environment designed to instill a special relationship of trust” with the couple, who have since divorced.
The panel’s decision was the first major loss for Kinkade and Media Arts Group in litigation brought by former dealers. The artist and his company had prevailed in at least three previous arbitration claims.
Dana Levitt, an attorney for Kinkade, Barnett and Media Arts Group, said he agreed with the dissenting arbitrator’s view and said the other two arbitrators made “numerous substantial errors” in their finding. Levitt said he would seek “appropriate legal remedies” to void the ruling before it becomes final.
“I think the evidence is very strong that my clients did what they were required to do,” Levitt said. “The plaintiffs knew what they were getting into. It was a business investment that had certain risks and it didn’t work out for them. And now they want my clients to pay the price for mistakes they made.”
Spinello said in a statement that he and Hazlewood attended the mandatory, weeklong Thomas Kinkade University, which is a $750 training session for prospective gallery owners.
Spinello and Hazlewood bought their first Kinkade print “New Day Dawning” in 1996 and were drawn to its images and to Kinkade’s wholesome values.
Kinkade’s paintings generally depict tranquil scenes, heavy on country churches, lighthouses, trees and cottages with streams running nearby, a style that some critics say is too literal and sentimental to be considered fine art.
Spinello said they were forced by Media Arts Group to buy two or three new copies of each new edition of Kinkade’s canvas reproductions, but they proved to be slow sellers. The dealers were not allowed to discount the pieces, some of which costs thousands of dollars, and could return them only if they bought two or three new prints for each one sent back.
Spinello and Hazlewood closed their galleries in 2003. Media Arts Group went private for $32.7 million in 2004 and has been renamed Thomas Kinkade Co.
The panel’s interim award does not include interest, costs and attorneys fees and the amount could reach $3.5 million, said Norman Yatooma, the couple’s Birmingham, Mich. lawyer. Yatooma said his firm represents 23 Signature Gallery franchisees from seven states in pending arbitration.
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