The New York Times recently reported on a lawsuit filed in New York State Court in which the heirs of Fritz Grunbaum are citing the recently enacted Holocaust Expropriated Art Recovery Act (known as the HEAR Act) in an effort to claim two valuable drawings by the late Austrian artist Egon Schiele.  The HEAR Act, adopted last December, has been widely praised as a necessary tool to provide the victims of Holocaust-era persecution and their heirs a fair opportunity to recover works of art confiscated or misappropriated by the Nazis during World War II.

Grunbaum’s nearly 450 piece exquisite art collection has been the center of controversy almost since the collection was confiscated from his Vienna apartment in 1938.  Over the years, Grunbaum’s heirs have argued that the collection was stolen by the Nazis.

Others, such as collectors, dealers and some museums have countered that the artwork was inventoried by the Nazis and not stolen, and that 53 of the some 81 Schiele works were legitimately sold by Grunbaum’s sister-in-law to a Swiss art dealer in 1956.  These parties are of the view that previous courts have found that the Schiele works were not stolen and that no further claims should be considered on such works.

However, the Grunbaum heirs assert that the previous claims, in the present case and others, were determined on legal technicalities, not the merit of the argument that the works were looted by the Nazis and that this is the type of case that the new law was enacted to address.

The HEAR Act creates a federal statute of limitations for such claims that is six years from the time of “actual discovery” of the whereabouts of the work.  The new law is consistent with the “spirit of two international proclamations stating that technicalities should not be employed to prevent stolen property from being returned to rightful owners.”

The two Schiele works being sought by Grunbaum’s heirs, namely, “Woman in a Black Pinafore” (1911) and “Woman Hiding Her Face” (1912), were part of the 1956 sale to the Swiss dealer.  The attorney for Grunbaum’s heirs, however, argues that the circumstances of the 1956 sales transaction were never fully investigated and that the lost works were not discovered by the heirs until they were noticed for sale at a 2015 art fair.  The two Schiele drawings are said to be valued together at about $5 million.

The Grunbaum heirs’ suit was filed in November 2015 after learning that Richard Nagy, a London art dealer and Schiele specialist, was trying to sell the two Schiele drawings at an art fair at the Park Avenue Armory earlier that same year.  Nagy has fought the claim in court by arguing that he acquired both works “in good faith and in a commercially reasonable manner” after the United States Supreme Court declined to hear the attorney for Grunbaum’s heirs appeal of an earlier case.  Nagy’s attorneys argue that prior court rulings on the Schiele works from the Grunbaum collection were based on a finding that such works had been properly conveyed in 1956.  Specifically, Nagy’s attorneys assert that the attorney for Grunbaum’s heirs was wrong to invoke the new HEAR Act because the law does not apply to cases where a final judgment has been reached.

Agnes Peresztegi, president and legal counsel of the Commission on Art Recovery, an organization founded by billionaire art collector Ronald S. Lauder, however, sides with the position of the attorney for Grunbaum’s heirs.  She indicated that the prior case was not decided on the merits, but rather on a technical issue that too much time had passed to pursue a claim.  Peresztegi “welcomes the use of the new law in deciding whether many of the Grunbaum collection’s Schieles, including the two owned by Mr. Nagy, were stolen.”

The attorney for Grunbaum’s heirs maintains a positive attitude regarding the case in which he recently indicated that “[w]e believe that the expert report and scholarship of Dr. Jonathan Petropoulos, the world’s leading expert in this field, will persuade the court that the evidence shows that Fritz Grunbaum was a victim of Nazi art looting.”

We will continue to monitor this case and will report updates on same on the Art Law blog.

 

 

 

As recently reported in the New York Times, the heirs of Alfred Flechtheim, a prominent German art dealer and collector, brought suit in federal court in Manhattan earlier this week against the German state of Bavaria over alleged Nazi-looted art works.  The heirs argue that the German state of Bavaria has refused to return art works that were looted by the Nazis before World War II.

The Flechtheim heirs seek the return of eight paintings by artists Max Beckmann, Juan Gris and Paul Klee from the Bavarian State Paintings Collection.  According to the complaint, the eight paintings include Beckmann’s “Duchess of Malvedi” (1926), “Still Life with Cigar Box” (1926), “Quappi in Blue” (1926), “Dream—Chinese Fireworks” (1927), “Champagne Still Life” (1929) and “Still Life with Studio Window” (1931); Gris’ “Cruche et Verre Sur un Table” (1916) and Klee’s “Grenzen des Verstandes” (1927).

The heirs had been in negotiations with the Bavarian government for seven years prior to filing their suit.  In their court filing, they accused the German state of not meeting international commitments on the restitution of Nazi-looted art.  Specifically, the complaint states “Bavaria’s refusal to confront its responsibility has persisted since the war” and its “chain of title to the paintings is defective because it was rooted in the seizure of Flechtheim’s property in violation of international law.”

In the complaint brought by the son and widow of Flechtheim’s nephew, the heirs allege that the works being sought were among those Flechtheim was forced to leave behind as he fled Germany and his galleries were taken over.

The Bavarian government has previously taken the position that the paintings were not looted art and that the works were sold by Flechtheim in 1932 before the Nazis came to power.  And, in 1974, the paintings were later donated to the Bavarian State Paintings Collections by Munich art dealer, Günther Franke.

The Flechtheim heirs, however, dispute the Bavarian government’s position, citing evidence that they claim shows the paintings were still in Flechtheim’s possession in 1934 after the Nazis came to power.  The heirs criticize the German state for its refusal to open records that they claim would be helpful in researching the fate of the paintings.  Their court filing cites a letter sent last year to the governor of Bavaria by nearly 30 members of United States Congress requesting “‘greater dialogue and cooperation to fulfill’” international principles aimed at supporting the restitution of art seized by the Nazis.”

The case is Hulton et al. v. Bayerische Staatsgemaldesammlungen et al., United States District Court, Southern District of New York, No. 16-09360.

The Arts + Business Council of Greater Philadelphia is an organization dedicated to strengthening Philadelphia arts, culture, and for-profit creative businesses, by connecting the creative sector with the business, legal and technology communities.

One of the ways it fulfills its mission is through the Philadelphia Volunteer Lawyers for the Arts program, which provides pro-bono and low cost legal assistance, educational programs and business counseling to artists, arts organizations, culture and heritage organizations, collectives, makers, inventors and startups in an effort to secure a thriving culture in the region and the innovation economy statewide.

Learn more here.

The National Law Review recently summarized key lessons gleaned from Hoffman v. L&M Arts, et al., No. 15-10046 (5th Cir. Sept. 28, 2016), regarding the drafting and construction of confidentiality provisions for the sale of artwork.

Hoffman involved a claim for breach of a confidentiality provision in a Letter Agreement between Marguerite Hoffman, a wealthy art collector seeking to sell her “Untitled” 1961 Mark Rothko oil painting, and L&M Arts, a broker which was acting as an intermediary between Hoffman and the buyers, Studio Capital, Inc. and David Martinez.

The Letter Agreement included the confidentiality language: “All parties agree to make maximum efforts to keep all aspects of this transaction confidential indefinitely.”  In addition, the Letter Agreement required the buyers to not hang or display the painting for six months after the sale.

Several years later, the buyers auctioned the painting, which appeared on the cover of the Sotheby’s catalog and sold for more than $31 million.   In response, Hoffman sued L&M Arts, and the buyers for breach of the confidentiality provision of the Letter Agreement.

On appeal, the Fifth Circuit Court of Appeals, among other things, found that the Letter Agreement was not breached and ruled in favor of L&M and the buyers.  Read the full opinion here.

National Law Review’s key lessons:

  • Confidentiality provision may be used to keep the sale of artwork secret, but have to be limited in scope so as to not be deemed an unreasonable restraint on the sale of property. A significant factor with respect to enforceability of such provisions is the length of the restriction.
  • Confidentiality provisions should clearly define its scope including date, time or geographic restrictions, as well as what each party to the transaction can and cannot do.
  • The parties to a transaction should always ensure that every party is bound by the confidentiality provisions, or, at the very least, include an indemnity provision for the breach of a third-party buyer when an intermediary is used.
  • In case of breach of the confidentiality provisions, parties should clearly draft the remedies and damages that may follow.

Read the full story here.

In recent New York art world news, a dispute between actor Alec Baldwin and art gallerist Mary Boone has taken a new twist with the filing of a motion in New York State Supreme Court by Ms. Boone’s attorneys accusing Mr. Baldwin of committing fraud by failing to pay sales tax on a painting he had purchased from her in 2010.

The filing comes on the heels of a lawsuit brought by Mr. Baldwin against Ms. Boone over a month earlier alleging that the gallerist had defrauded him six years ago “by promising him a painting, “Sea and Mirror,” by the artist Ross Bleckner, for which he had paid $190,000, but supplying him another, similar Bleckner painting” by the same name.  Mr. Baldwin initially had concerns about the painting after he purchased it from the gallerist in 2010.  Mr. Baldwin has claimed that he was never informed that he would be receiving a different version of the painting and that Ms. Boone had “intentionally created a copy to appear genuine, and to fool him by passing it off as the real thing.”

In the motion to dismiss Mr. Baldwin’s lawsuit, Ms. Boone’s attorneys allege that at the time of purchase of the painting six years ago, the actor left delivery instructions that the painting be shipped directly to his home in California and then shortly after it had been delivered to the West Coast, the painting was shipped back to Mr. Baldwin’s apartment in New York.  Accompanying the filing is evidence that the painting arrived in Woodland Hills, California in late April 2010 and then was installed in Mr. Baldwin’s New York City apartment the subsequent month, describing this as a way for Mr. Baldwin to evade taxes of nearly $17,000.

Mr. Baldwin’s attorney asserts that Ms. Boone only seeks to “distract attention” from the actor’s claims and does not deny the primary allegation in Mr. Baldwin’s complaint.

Ms. Boone’s attorneys reject Mr. Baldwin’s lawsuit as false and believe it is invalidated by the statute of limitations because he took too long to bring his claim. In this latest filing, the gallerist’s attorney asserts that the two paintings are so different from each other that Mr. Baldwin should have known he was receiving a different version of the Bleckner painting.

 

The New York Times has reported that the estate of a German businessman has sued the Metropolitan Museum of Art last Friday to claim one of its valuable Picassos, “The Actor” (1904-05), alleging in the court filing that the museum does not hold title to the painting because the businessman was forced to sell the work for a low amount after fleeing the Nazis in the late 1930s.  The treasured oil on canvas depicts an attenuated male figure making hand gestures that signaled the beginning of Picasso’s interest in “the theatrical world of acrobats and saltimbanques” during the artist’s Rose Period.  The painting is estimated to be worth more than $100 million said lawyers for the estate in the court filing.

In the court filing it is alleged that the museum “did not disclose or should have known that the painting had been owned by a Jewish refugee, Paul Leffmann, who had disposed of the work only because of Nazi and Fascist persecution.”  The lawsuit alleges that the sale of the painting was made under duress to a collector of Picasso’s work and Picasso’s dealer for $13,200 in 1938.  In 1941, Thelma Chrysler Foy bought the painting through a New York art gallery for $22,500 and eventually donated it to the Met in 1952 where the painting has been continuously displayed since.  The lawyers for the estate said that they had conducted negotiations with the Met while the claim was being investigated by the museum, but the parties had never been able to reach a settlement.

In a statement, the Met “strenuously denied there were grounds for the claim, asserting that the 1938 sale had been for fair market value and had not been made under duress.”  The museum added that the German businessman and his family did not make any claim on the painting after the war when trying to reclaim property they had been forced to sell.

The lawyers for the estate have criticized the museum claiming that for a number of years it had given an “erroneous provenance” for the painting until being corrected in 2011.  The Met indicated that the provenance was not erroneous as it was based on the recollection of the buyer at the time.  The provenance reflected that the painting was owned by a German in Switzerland and was updated as further information became available, according to the museum.

The suit is Zuckerman v. Metropolitan Museum of Art, U.S. District Court, Southern District of New York, No. 16-07665.

UPDATE: In follow up to our posts regarding the Peter Doig lawsuit, last month, a federal court in Illinois declared that the disputed work signed “Peter Doige 76” is not the work of famous Scottish born artist Peter Doig.  Among the many odd facts presented in this case was the glaring issue that “Doig” and “Doige” are two different names. This case demonstrates that authentication, even by the living artist himself, can prove to be a costly endeavor for all parties involved.

There may be some lessons learned from the Doig matter:

In this digital age, creating a definitive catalogue of work may be easier than ever for living artists, and artists that want to maintain control over their body of work should take advantage of innovative technologies that permit them to document their works.  The fact that the Doig matter went to trial demonstrates that the Visual Artists Rights Act of 1990 (VARA) is not the panacea for all of the legal issues facing artists. In particular, VARA provides artists rights for disavowing damaged or modified work but does not address when the art is misattributed.

In a recent interview, Doig commented on the time and money wasted on the lawsuit.  It is not clear whether the plaintiff will appeal the court’s decision.

Further to our post below regarding the trial over the authenticity of a painting alleged to have been made by the Scottish painter Peter Doig, some interesting notes regarding the waning days of the trial were captured by artnet.  Among them:

* The lawyers and the Judge differed as to the pronunciation of Doig’s name;

* During cross-examination, the attorney representing the plaintiffs asked whether the work in question was a painted by “Captain Butterknife.”

* The question of whether Doig was incarcerated at Thunder Bay as alleged by the plaintiffs appeared to have been left unanswered.

The final verdict is expected to be given orally in the coming weeks.

Read more here.

By Daniel Schnapp.

Scottish artist Peter Doig claims he didn’t paint the painting depicted below, and now he is forced to prove it at trial.  The New York Times recently reported on this strange case of art authentication, involving Doig’s disavowal of the painting and alleged mistaken identity.  Read full article here.

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Image: WHITTEN SABBATINI/NYT

The owner of the painting is a former corrections officer who alleges that in 1975 he purchased the painting from Doig, who was incarcerated at a Canadian detention facility at that time.  Doig denies having ever been near the detention facility, or ever being incarcerated. The lawsuit is currently pending in the U.S. District Court for the Northern District of Illinois.

The Wall Street Journal recently published an in-depth story on the Goulandris art collection, which is currently in the middle of one of the largest and most complex legal disputes over ownership of art in Europe.

The story involves a private art collection valued as much as $3 billion that has been mostly out of public view over the past two decades, an offshore company used by a secret seller to put up artwork for auction, and a dispute that essentially boils down to a non-existent will and an inscrutable one.

The late Greek shipping mogul Basil Goulandris and his late wife, Elise, amassed one of the world’s most significant private art collections, which included several hundred pieces of treasures by a number of renowned artists such as Picasso, van Gogh, Cezanne, Monet, Degas, Pollock, and Balthus.

For further information on this intriguing saga involving the Goulandris art collection, visit The $3 Billion Family Art Feud.