Artists sue The Hole and Kathy Grayson over unpaid sale proceeds
The gallery's books allegedly show it owes Daniel Um and Nastaran Shahbazi $49,975.50 for consigned artworks it sold.
Law and Crime
Two artists sued New York gallery The Hole and its founder Kathy Grayson on Thursday, alleging the gallery sold their consigned artworks, collected the money and failed to pay them nearly $50,000.
Daniel Um, a painter who lives in Brooklyn, and Nastaran Shahbazi, who lives in France, filed the lawsuit in New York County Supreme Court. The gallery’s books show it owes Um $28,975 and Shahbazi $21,000.50, they said in the complaint.
Under New York’s art consignment law, money a gallery collects from selling a consigned work belongs to the artist. The gallery holds it in trust, cannot spend it on its own bills, and cannot ask an artist to sign that protection away.
The artists alleged The Hole instead treated their sale proceeds as part of its general operating cash, using available money to pay rent, other creditors and other artists while they went unpaid for more than a year. Shahbazi’s earliest unpaid proceeds trace to a sale recorded in May 2024, documents show.
Paid subscribers can read the full complaint.
Court Documents: Um v. The Hole
Records from New York County Supreme Court.
Adam Schrader
The complaint quotes a series of written acknowledgments from the gallery stretching back to April 2025, when a gallery director told Shahbazi that a sales slowdown had delayed her monthly payment and that “your payment is a priority for us.”
“We would never not pay you, we will not leave you hanging!” Grayson wrote to Shahbazi on May 22, 2025, documents show.
A year later, Grayson wrote that the gallery was “watching our account daily to see if any of the people that owe us money pay us” and would send Um payment “as soon as we receive some funds,” the complaint said.
On June 2, 2026, she wrote that the gallery was “still trying to get funds to send Daniel Um a monthly payment” and was “at a standstill waiting for two large and overdue sales,” documents show.
The artists also point to gallery bank records. In March 2026, The Hole wired Um $3,000 from a Citibank account labeled “Payroll” rather than from any trust or consignment account, and the gallery’s bookkeeper arranged the wire at Grayson’s direction, the complaint said.
The two artists alleged they are not the only ones. The gallery allegedly made a practice of treating consignment proceeds as operating cash, “resulting in substantial unpaid balances to multiple artists whose works The Hole had sold.”
The lawsuit accuses the gallery and Grayson of violating the consignment law, breaching their duties as trustees of the artists’ money, taking that money for their own use and breaking the consignment contracts.
The artists asked the court for the unpaid amounts plus interest, punitive damages, attorneys’ fees and a full accounting of every sale of their work and where the money went.
They argued that Grayson is personally liable because she owns and controls the gallery and, in her own written messages, directed how its incoming funds were spent.
Grayson, a former director at Deitch Projects, opened The Hole at 312 Bowery in 2010 and added a Tribeca location in 2021 and an 8,000-square-foot Los Angeles space in 2022.
The news of the lawsuit comes after a New York landlord dropped a rent case against The Hole, which had previously alleged it owed more than $60,000 for its longtime Bowery space.
Bremen House, the landlord for The Hole’s ground-floor storefront at 312 Bowery, discontinued the rent case in a notice dated April 30 and filed May 4 in New York Civil Court. The notice ended the case without prejudice, allowing the landlord to bring a similar claim again.
Follow along with other lawsuits at Urgent Matter's art lawsuit tracker.
Members Discussion