By Joseph Ax

NEW YORK, Nov 15 (Reuters) - An art gallery cannot sue Sotheby's for abruptly canceling the sale of an artwork by Cady Noland after she claimed it was damaged, a state judge ruled this week.

Manhattan art gallery Marc Jancou Fine Art sued the auction house and Noland earlier this year, seeking at least $26 million in damages from each, after Sotheby's canceled the sale of "Cowboys Milking" at Noland's request.

The piece is a print on aluminum that Sotheby's expected to sell for between $250,000 and $350,000 on Nov. 10, 2011. Another Noland work, "Oozewald," set an auction record for a living female artist the day before when it went for $6.6 million, more than twice the anticipated price.

Noland asked Sotheby's to pull "Cowboys Milking" on the eve of the auction after she inspected it and found that the corners were dented and damaged.

Marc Jancou had claimed that Sotheby's breached its consignment contract with the gallery to sell the work and that Noland had interfered with the contract. The lawsuit had sought $6 million in actual damages from Sotheby's for each of two claims, breach of contract and breach of fiduciary duty, as well as $20 million in punitive damages for the second claim.

The tortious interference claim against Noland seeks $6 million in actual damages and $20 million in punitive damages.

But Supreme Court Justice Ellen Coin said Noland had the right to remove her name from the artwork under the Visual Artists Rights Act, which protects artists' "moral right" to preserve work in the form in which it was created.

Once Noland did so, Coin ruled, Sotheby's could withdraw the work from auction under the contract, which permitted the auction house to cancel the sale if it had "doubt as to its authenticity or attribution."

"Given Noland's assertion of her right under VARA to prevent the use of her name in connection with plaintiff's print, there was more than 'doubt' as to attribution, and Sotheby's was within its rights to withdraw the print from the auction," Coin wrote in granting Sotheby's motion for summary judgment.

Daniel Brooks, a lawyer for Noland, said he expected that the claim for tortuous interference against Noland will be dismissed, since Coin found that the contract was not breached.

Sotheby's did not immediately comment on the ruling.

Marc Jancou's lawyer, Paul Hanly, did not immediately return a call for comment.

The case is Marc Jancou Fine Art v. Sotheby's, New York State Supreme Court, New York County, No. 650316/2012.

For Marc Jancou: Paul Hanly of Hanly Conroy Bierstein Sheridan Fisher & Hayes.

For Sotheby's: Charles Moerdler of Stroock & Stroock & Lavan.

For Noland: Daniel Brooks of Schnader Harrison Segal & Lewis.

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