When City Arts LLC opened at 902 SW Morrison St. in November 2006, hopes were high that the gallery could be like Saturday Market with a roof.

But after just 14 months, City Arts LLC owners were three months behind on their $4,000 monthly rent to the city and owed $10,000 to artists.

So with the lease on the city-owned space up Jan. 28 and renegotiations unfruitful, City Arts LLC owners Toni Christensen, Tracie VanNess and Robert Moore had to tell about 90 artists that City Arts would be closing. And almost two months later, many artists have yet to be paid the remaining balance owed them for sold artwork.

The city wants its money, too, serving Christensen and Van Ness with a lawsuit March 18 in an attempt to collect unpaid rent, according to city property manager Diana Holuka.

Sculptor Michelle Gallagher, 52, was the first to file a small claims court lawsuit against City Arts owners for the $850 she's owed and the first to file a claim with the attorney general's Office, where financial fraud and consumer protection complaints can be reported.

"I did it on principle," she says.

In a mass email to fellow artists March 13, Gallagher wrote, "I am only one of many artists who has not been paid for artwork sold in this gallery. Although I was able to retrieve my unsold pieces and display items, many others were not."

Gallagher heard from about a dozen angry artists who were owed money ranging from $232 to $3,060. Other artists are standing behind the City Arts owners and blame the pitfalls on a fickle art economy.

Ceramic sculptor Elisabeth Cook Sullivan, 63, is owed between $400 and $500 but stresses the owners graciously reduced her rent when she had financial troubles of her own.

"It was a high-class place. I was really sorry that they were unable to make it," she says.

City Arts attorney John Crowell told WW that the owners struggled financially with the business but never took out more than $1,250 a month each for their own salaries.

"They hoped the 2007 holiday season would bail them out, but in fact it was a disaster," he says. "No one got rich here or received anything they didn't deserve."

Christensen, who has been a staple at Saturday Market, selling her handmade children's clothes, says she will not be re-entering the Portland art scene.

"We're devastated," she says. "We've got a lot of shattered relationships that are going to take time to rebuild."

As debts have started to generate lawsuits, owners may also face more than fractured friendships.

"We have a good consignment law in this state and it should be adhered to," says longtime local artists' lawyer Kohel Haver. "Part of that law says that the dealer is prohibited from diverting sales proceeds."

In other words, dealers can't use any money from the sale of artist's work, other than the gallery's negotiated commission, to pay off gallery debt. Legally, galleries may hold funds from artists' sales for 30 days, then after that it's a class C felony under Oregon consignment law if they don't pay up.

Crowell contends the situation "is entirely a civil matter and not a criminal one."

Here's what some of the artists who rented space from City Arts have to say:

Tamara Adams, 41, painter
Showed at City Arts since: November 2006
Amount owed: Undisclosed. "I'm OK with where I stand with them," she says.

Adams says she admires the intentions of the owners to support local art. "I really care about all of them and am not about to crucify them over this," she says. "It's not like they're holding some big bag full of artists' money."

Elisabeth Cook Sullivan, 63, ceramic sculptor
Showed at City Arts since: November 2006
Amount owed: Between $400 and $500

Cook Sullivan says City Arts was a well-done gallery. She says when she was going through a financial rough patch the owners graciously reduced her rent so she could stay. When it comes to the money owed to her, she says Christensen is adamant that she wants to pay her back. "To me, a class-action suit is ridiculous. You can't get blood out of a turnip—there's nothing there to go after."

Michelle Gallagher, 54, sculptor
Showed at City Arts since: September 2007
Amount owed: $850

"I wasn't notified of the closing and was caught totally off guard," she says. After realizing she was owed a sizable amount of money, Gallagher sent an email invoice that she says elicited no response from City Arts. She then mailed invoices to the owners' homes. The letters were returned unopened. That's when she decided to file with small claims court and send a mass email to encourage artists to fight back.

Sharon Geraci, 57, mixed-media collage artist
Showed at City Arts since: November 2006
Amount owed: $0

Geraci knew the owners from a number of years ago and says they did their best at a business where success is hard to come by. "I have no hard feelings," she says. "I hope they can rise like the phoenix out of the ashes. It's easy for artists to assume the worst and have unrealistic expectations."

Marilyn Hake, 80, pencil illustrator
Showed at City Arts since: July 2007
Amount owed: $851 for artwork; $4,500 total, including travel and shipping expenses

Hake's daughters took her to Portland for her 80th birthday from her home in Tipton, Kan. On that trip she met City Arts' owners, who she says treated her "like an old friend they were getting reacquainted with." She was encouraged to ship her art to Portland to sell in the gallery, which she did out of her own pocket. When Hake heard that the gallery had shut down—from a friend, not from the owners—she frantically called around trying to find her artwork. Of the pieces that were shipped back to her, again on her own bill, she says 22 items that hadn't been sold were unaccounted for. "I'm in the hole big time," Hake said.

Margie Lee, 58, painter
Showed at City Arts since: August 2007
Amount Owed: $450

Lee found out City Arts was "being forced to vacate right away," from an email sent by City Arts on Jan. 26. The email asked her to pick up her work right away, which perturbed Lee because she had paid rent through Jan. 31. "To me, to try and cheat artists is like kicking someone in a wheelchair," she says. "Everyone knows how hard it is for artists to make a living." Lee filed a lawsuit with small claims court at the beginning of March and has yet to receive a court date. She has also filed a complaint with the Attorney General's Office.

Joe Pogen, 60, metal sculptor
Showed at City Arts since: November 2006
Amount owed: $3,060

Pogen began to sense trouble last October when he was supposed to receive a large check from City Arts and they told him it had been stolen. In November he stopped getting paid. Owner Moore personally called Pogen to tell him the gallery was closing and to come collect his work. "I went within an hour to get my stuff," Pogen said. "I asked them about the money they owed, and they said they doubted I'd get paid, and I believed them. I figure whatever they made they spent."

Nancy Smith Klos, 48, tapestry designer
Showed at City Arts since: October 2007
Amount owed: $232

In December, Smith Klos was "ordered" to remove her work from the gallery. They told her "your stuff didn't sell, we need it out of here," she says, which was a breach of a three-month contract. After not being paid by City Arts for four months, Smith Klos asked for her money to no avail. "They have cheated a lot of artists out of their commission pay," she said of the City Arts' owners and their associates. "I'd say losses are up to $50,000." She is not owed enough money to pursue the problem with a lawyer, she says, but is considering taking steps independently in small claims court after she sees the result of Gallagher's case. Smith Klos says she is also upset that her 13-year-old daughter, Anna, is owed $9 from a gift certificate she was given by City Arts after performing an Irish step dance at the gallery at a First Thursday.