A New York State Judge has ruled that the Richard Avedon Foundation can continue to pursue its claim for breach of contract against the art insurance company AXA. The case brings to light the subjective nature of valuing works of art, and the complexity of working out the financial implications of damage to artwork.

In December 2011, one of the celebrated photographer’s prints, the triptych ‘The Chicago Seven, September 25, 1969’, was damaged by water while in storage. The print was insured by AXA, but the two parties have failed to agree on the financial value of the damage sustained.

According to the recent ruling detailed on artnet, AXA hired Edward Yee of Penelope Dixon & Associates to value the work “both prior to and after its damage.” Yee valued the work in its pre-damage condition at $1.99 million. After the conservation work was complete, Mr. Yee revisited the work and judged that it had suffered a $398,000 loss in value from the damage.

However, AXA maintains that Yee’s report was neither a formal appraisal as defined by the Uniform Standards of Professional Appraisal Practice (reportedly the gold standard for the industry in the USA), nor a guarantee of what the work would bring if offered for sale.

The Avedon Foundation meanwhile brought in an appraiser who concluded that the work was worth $2.5 million in its pre-damaged condition, and that as a result of the water damage, the work was worth only $50,000.

AXA then tried to get the Avedon Foundation’s claim dismissed on the basis that it was filed after the two-year limitation period specified in its policy had expired.

They also said that the foundation’s appraiser, Sarah Morthland, was “motivated [by a] desire to assist the foundation.” If the work was declared a total loss, AXA argued, the contract would require the foundation to surrender it, and that Ms. Morthland professed it to have some minimal value to enable the foundation to keep it while still recovering almost the entirety of the work’s pre-damage value.

The Judge denied the insurer’s motion, noting that it was “neither fair nor reasonable to require a suit within two years from the date of the loss, while imposing a condition precedent to the suit … that cannot be met within that two-year period.”

“Here we have a huge insurance company trying to deny appropriate coverage for water damage done to an historic and highly valuable piece of art,” said Robin Cohen, an attorney representing the photographer’s foundation.

Meanwhile, a representative of AXA maintained that the insurance company “has always been willing to pay Avedon the full amount that Avedon is actually entitled to under the policy.”