7/10/2019 Reif v Nagy (2019 NY Slip Op 05504) · 7/10/2019 Reif v Nagy (2019 NY Slip Op 05504)

7/10/2019 Reif v Nagy (2019 NY Slip Op 05504)

www.nycourts.gov/reporter/3dseries/2019/2019_05504.htm 1/26

ReifvNagy

2019NYSlipOp05504

DecidedonJuly9,2019

AppellateDivision,FirstDepartment

Singh,J.,J.

PublishedbyNewYorkStateLawReportingBureaupursuanttoJudiciaryLaw§431.

ThisopinionisuncorrectedandsubjecttorevisionbeforepublicationintheOfficialReports.

DecidedonJuly9,2019SUPREMECOURT,APPELLATEDIVISIONFirstJudicialDepartmentJohnW.Sweeny,Jr.,J.P.RosalynH.RichterPeterTomCynthiaS.KernAnilC.Singh,JJ.

161799/158172

[*1]TimothyReif,etal.,Plaintiffs-Respondents,

v

RichardNagy,etal.,Defendants-Appellants.

DefendantsappealfromanorderoftheSupremeCourt,NewYorkCounty(CharlesE.Ramos,J.),enteredonoraboutJune11,2018,which,interalia,grantedplaintiffs'motionforsummaryjudgmentontheirclaimsofreplevinandconversiondirectingdefendantstoreturntheArtworkstoplaintiffs,andforanawardofdamages,costs,andattorneys'fees.

NixonPeabodyLLP,NewYork(ThaddeusJ.StauberandKristinM.Jamberdinoofcounsel),forappellants.

http://www.courts.state.ny.us/reporter/



DunningtonBartholow&MillerLLP,NewYork(RaymondJ.DowdandSamuelA.Blausteinofcounsel),forrespondents.

SINGH,J.

ThiscontroversystemsfromartallegedlylootedbytheNazisduringWorldWarII.WeareaskedtodecidewhetherSupremeCourtproperlygrantedplaintiffs,TimothyReifandDavidFrankel,asco-executorsoftheestatesofLeonFischerandMilosVavra(collectivelyplaintiffs),summaryjudgmentontheirclaimsforconversionandreplevin.WefindthatplaintiffsmadeaprimafacieshowingofentitlementtojudgmentasamatteroflawthattheyhavesuperiortitletotwopiecesofartbyEgonSchiele,"WomanHidingHerFace(1912)"and"WomaninaBlackPinafore(1911)"(collectivelytheArtworks),andthatdefendantsRichardNagyandRichardNagyLtd.(collectivelydefendants)failedtoraiseatriableissueofmaterialfact.

Background

PlaintiffsarethelegallydeclaredheirsofFritzGrunbaum(Grunbaum),awell-known

[*2]JewishViennesecabaretartistandartcollector[FN1].GrunbaumadmiredtheViennesemodernartist,EgonSchiele,andamassedan81-piececollectionofhisworkbeforeWorldWarII.AftertheNaziinvasionofAustriaonMarch12,1938,Grunbaumattemptedtoescapewithhiswife,Elisabeth"Lilly"(neeHerzl)Grunbaum(Elisabeth),toCzechoslovakia,butwasapprehendedandarrestedbytheNazisonoraboutMarch22,1938.FromthetimeofhisarrestuntilhismurderonoraboutJanuary14,1941,Grunbaumremainedimprisonedinvariousconcentrationcamps,includingBuchenwaldandDachau.

ThroughoutGrunbaum'simprisonmentElisabethendeavoredtosecurehisreleasesothattheycouldfleetofamilyabroad.Hersister,MathildeLukacs(Mathilde),andbrother-in-law,SigmundLukacs(Sigmund)(collectivelytheLukacses)hadfledViennatoescapeNazipersecutionoftheJews.SigmundhadbeenarrestedatthesametimeasGrunbaumbutwasreleasedtwomonthslateronconditionthathewouldleaveAustria.HeandMathildeescapedtoBelgiumonAugust26,1938,wheretheyresideduntil1941whentheyfledtoBrussels.ElisabethremainedinAustriahopingGrunbaumwouldbereleased,aspromisedbycertain

Germanofficers.However,startingonKristallnacht[FN2]andcontinuingthroughoutthewar,



theNazispassedaseriesoflawstargetingtheVienneseJewishcommunity,directlyimpedingElisabeth'seffortstosecureGrunbaum'sreleaseaswellherownabilitytofleeNazipersecution.

OnJuly16,1938,whileGrunbaumwasimprisonedatDachau,theNazisforcedhimtoexecuteapowerofattorneyinfavorofElisabeth.Justfourdayslater,pursuanttothepurportedpowerofattorney,ElisabethwascompelledtopermitaNaziofficialnamedFranzKieslinger(Kieslinger)toinventoryGrunbaum'sproperty,includinghisartcollection,whichcontainedthe81piecesbySchiele.KieslingerdeterminedGrunbaum'sentireartcollectionof

over400piecestobevaluedat5,791Reichsmarks(RM)[FN3].KieslingerinventoriedtheSchielepiecesasfollows:[*3]hefirstlistedthefiveoilsbyname,thenhelistedtogether55sheetsof"largehanddrawings,"20pencildrawings,andoneetching,butgavenomoredetails,northeirtitles.Grunbaum'scollectionalsoincludedFrenchwatercolorsandpiecesbyartistssuchasRembrandt,Degas,RodinandDurer,allidentifiedbynameintheKieslingerinventory.OnlyGrunbaum'snameappearsontheinventory.ElisabethhadherownpropertyandfiledaseparatedeclarationonbehalfofherselfonoraboutApril27,1938.

Sometimeafteritwasinventoried,Grunbaum'sentireartcollectionwasdepositedwith

Schenker&Co.,A.G.(Schenker),aNazi-controlledshippingcompany,[FN4]andmarkedfor"export."OnSeptember8,1938,thecompanyformallyappliedforanexportlicensefor"LillyGrunbaum."Thelicense,however,isdevoidofcustomsstamps,meaningthattheart

collectionneverlegallyleftAustria[FN5].Inaddition,asubsequentlyfiledstatementofassetsdatedNovember12,1938,listsGrunbaum,"formerlyVienna...nowBuchenwalde,"asstillpossessing5,791RMworthof"picturesandgraphics."

PriortofleeingAustria,theLukacses'werealsoforcedtoinventorytheirassets.InherpropertyregistrationdatedJuly15,1938,Mathildereportedatotalof22pictures,withoutfurtherdetail,whichwerevaluedat400RM.ThisinventorycorrespondedwiththeLukacses'"movingnotice,"whichMathildehadfiledinthenameofSigmundonJune23,1938.ThenoticestatedthattheLukacseshad,amongotherthings,"23variousframedpictures,1photoframe,16smallphoto's[sic]andetchingsframed."SchenkerfiledanexportrequestonbehalfofSigmundonJune27,1938,whichlistedforexport"elevenoilpaintings,threewatercolors,eightgraphics,fiveminiatures,threedrawings,20piecesofmiscellaneousporcelainandtencarpets."TheitemsleftViennaonoraboutAugust12,1938,aboutthesametimethe



Lukacsesfled.TheGrunbaumartcollection,includingthe81worksbySchiele,wasnotlisted

aspartofanyoftheLukacses'emigrationdocuments.[FN6]

OnoraboutJanuary31,1939,attorneyLudwigRochlitzer(Rochlitzer)wasappointedas

[*4]theGrunbaums'AryanTrustee[FN7].Thatsameday,RochlitzersentElisabethabillfor6,500RMforservices.ItappearsthatElisabethpaidRochlitzer'sbill,butitisunclearfromwhoseassetsshepaidit.

Byearly1939,underNaziorders,Elisabethwasevictedfromherapartment.Shewenttolivewithanon-Jewishwoman,GreteHassel(Hassel).Aftergoingintohiding,ElisabethwascapturedbytheNazisandsenttoliveinthe"collectiveJewishresidences,"aeuphemismfor

"ghetto."[FN8]Intheghetto,shewasforcedtoliveinovercrowdedandsqualidconditions,deprivedofnearlyallvaluables.

Whileintheghetto,ElisabethfiledanupdatedpropertydeclarationonbehalfofGrunbaumonoraboutJune30,1939.ThatdeclarationlistedGrunbaum'sassetsasnowdepreciatedbytheReichFlightTaxwhichwas17,250RMandtheJewishPropertyLevyof8,800RM,aswellassomesmallerbills,but,notably,itdidnotincludeanydepreciationforRochlitzer'sbill.However,itstilllistedtheentireartcollectionasvaluedat5,791RM.Accordingly,Grunbaum'sartcollectionremainedinAustriaafterMathildefled.

OnSeptember3,1939,WorldWarIIbrokeout,makinganysubsequentJewishemigrationnearlyimpossibleandhighlydangerous.

GrunbaumwasmurderedatDachauonJune9,1941.ElisabethsignedadeclarationbeforeanAustriannotaryinconnectionwithobtainingherhusband'sdeathcertificate,stating,"[T]hereisnothingleft,"inotherwords,thereisnoestate.Therefore,"[b]ecauseofalackofgoodsorproperty,there[wasno]estateproceedingforinheritance"beforetheDachauProbateCourt.OnoraboutOctober5,1942,ElisabethwasmurderedatMalyTrostinecdeathcamp.

GrunbaumwassurvivedbyElisabethandtwosiblings,oneofwhomwasEliseZozuli(Zozuli).ZozuliwastheonlyheirwhosurvivedWorldWarII.Zozuliisdirectlyrelatedto

MilosVavra,[FN9]aplaintiffinthisaction.

PostwarRestitutionClaims



OnMay15,1947,Sigmundfiledtwoclaimstoreclaimhisproperty.HehadbeenforcedbytheNazistoclosehisbusiness,theyhadconfiscatedhisinventoryofjewelsandtheymade[*5]himpayanumberofexporttaxessothatheandhiswifecouldfleeAustria.Inthoseclaims,SigmundalsonotedthatMathildeandhehadbeenimprisonedinBrusselsbytheNazisonOctober26,1943andweredetainedinaseniorcitizens'homeuntiltheendofthewar.

OnJune16,1954,MathildeformerlyappliedtoanAustriancourttodeclareElisabethtobedeadandcertifyherheirship,butshewithdrewtheapplicationonJuly16,1954.

Additionally,in1959,MathildemadeaclaimforrestitutiononbehalfofhersisterElisabeth.HerclaimwasforElisabeth'sbankassetsandjewelry,includingalargepearlnecklace,adiamondandplatinumbrooch,andalargediamondring.SherescindedtheapplicationswhentheGermangovernmentrequestedacertificateofherrighttoinheritance.

Between1945and2002,otherpotentialheirstoGrunbaumattemptedtolayclaimtotheGrunbaums'lostassets.Noneweresuccessful.

OnApril19,1999,Vavra,agreat-nephewofGrunbaum,filedaclaimforrestitutionfor

Grunbaum'sworksofartinAustria[FN10].OnSeptember12,2002,LeonFischer(Fischer),secondcousinofElisabeth,andVavraweredeclaredbyanAustriancourttobethelegalheirsofGrunbaum.FischerandVavra(theheirs)passedaway,andplaintiffsReifandFrankelarethecurrentco-executorsoftheirestates.

Grunbaum'sSchieleArtCollection

TheKieslingerinventorydatedApril27,1938listedthatGrunbaumhad81piecesbySchiele.Grunbaum'sownershipoftheSchielescanbetracedbackto1928,whenheloaned21ofthepieces(thetwosubjectpaintingsnotincluded)tohisfriend,theVienneseartdealerOttoNirenstein(laterknownas,andhereinafterreferredtoas,OttoKallir),whoexhibitedthemaspartofaretrospectivecelebratingSchiele'swork.Thereisadetailedlistofall21piecesfromtheGrunbaumcollectionintheexhibition.However,the1928catalogcompiledbyOttoKallirfeaturesonlyfourofthepieces,explicitlyattributingthemtoGrunbaum,butfailstomentiontherestoftheloanedpieces.



In1930,OttoKallircompiledthefirstcatalogueraisonné[FN11]ofSchiele'swork(the

1930catalog).Three[FN12]piecesinthecatalogaredesignatedasbelongingtoGrunbaum,noneofwhicharethepiecesatissue.

Duringthesubsequentprewarandwaryears,therewasnomentionoftheSchielesatissueortheentireGrunbaumartcollection,asidefromtheKieslingerinventoryandtheSchenkerdocuments.

In1956,65piecesbySchielesurfacedatGutekunst&Klipstein(laterknownasandhereafterreferredtoasGalerieKornfeld),anartgalleryinSwitzerlandinwhichEberhardKornfeld(Kornfeld)wasaprincipal.TheartworkswereputonsalebyKornfeldonSeptember8,1956,almostimmediatelyafterthewindowforclaimsmadeinAustriaforNazilootedartclosed,onJuly31,1956.Thatsameyear,GalerieKornfeldissuedasalescatalogforitsSchielecollection(1956catalog),whichincludedtheartworksatissuehere,listedunderthetitles"Woman,SittingwithHandsonHips"and"Model,HidingFace."Thecatalogalsolisted"Dead[*6]CityIII"withaprovenanceofbeingpreviouslyownedbyGrunbaum.However,asidefrom"DeadCityIII,"noprovenanceisgivenfortheotherSchielepieces[FN13].Mathilde'snamedoesnotappearasprovenanceforanyofthepieceslistedinthe1956catalog.

OttoKallirpurchasedtheSchielecollectionlistedinthe1956catalogaswellasafewothers,totaling110pieces,fromGalerieKornfeldbefore1957.InOttoKallir's1966updateofhis1930catalog,GrunbaumisstilltheonlynamelistedastheprovenanceforthesameSchieleartworkshehadfeatured.Notably,whileKornfeld'sgalleryislistedinitsprovenanceaswell,Mathilde'snameisnowheretobefound.

In1988,JaneKallir,thegranddaughterofOttoKallir,published"EgonSchiele:TheCompleteWorks,"whichincluded"WomaninaBlackPinafore"(1911)and"WomanHidingHerFace"(1912),thecurrenttitlesoftheartworksatissuehere.Shealsolistedtheartworkswithoutfullprovenance,statingonlythattheywerepartofa"privatecollection."IntheBakalaraction,discussedinfra,JaneKallirtestifiedthattheSchieleswereofGrunbaumprovenance.However,inher1988cataloganditssubsequentupdates,thereisnomentionofeitherGrunbaumorMathilde.

The1998Seizureof"DeadCityIII"



In1998,"DeadCityIII"wasbeingexhibitedattheMuseumofModernArt(MOMA),

onloanbytheLeopoldFoundation,[FN14]acollectionamassedafterWorldWarIIbyDr.RudolphLeopoldandlatersoldtotheAustriangovernment.BeforethepaintingcouldberemovedfromNewYork,then-DistrictAttorneyRobertMorgenthauseized"DeadCityIII"onthegroundsthattheNazishadstolenitfromGrunbaum(seeMatterofGrandJurySubpoenaDucesTecumServedonMuseumofModernArt,93NY2d729,732[1999]).MOMAcontestedtheseizurecitingtosection12.03ofNewYork'sArtsandCulturalAffairsLaw,whichexemptsworksoffineartfromseizurewhileonexhibitioninamuseum.MOMAarguedthatitwascompelledtoreturnthepaintingtotheLeopoldFoundation(seeMuseumofModernArt,93NY2dat733-734).

TheCourtofAppealsquashedthesubpoenaonthegroundsthatitwascontrarytothelegislativeintentofthestatutetopermitsuchseizures.Itnotedthatthelegislativeintentwas"toinsulatenonresidentlendersfromseizuresvialegalprocessand,concomitantly,toprotectStateculturalinstitutionsthatdependuponthefreeflowofartforthebenefitofthepeopleoftheStateofNewYork"(id.at736).Asaresult,"DeadCityIII"wasreturnedtotheLeopoldFoundation.

The2005FederalActionRegarding"SeatedWomanWithBentLeftLeg"(1917)

In2005,DavidBakalarbroughtsuitagainsttheGrunbaumheirs,finallydeclaredtobeFischerandVavra,seeking,interalia,adeclarationthathewastherightfulowneroftheSchieledrawing"SeatedWomanWithBentLeftLeg"(1917),apiecehehadownedforover40years(seeBakalarvVavra,819FSupp2d293[SDNY2011],affd500FedAppx6[2dCir2012],certdenied569US968[2013]).

Bakalartestifiedthathehadpurchasedthedrawingin1963fromOttoKallir'sGalerieSt.Etienne,whichhadpurchaseditfromGalerieKornfeld.HemaintainedthathewasnotinformedofitsprovenanceandhehadneverheardofeitherGrunbaumorKornfeld(Bakalar,819FSupp2dat295).KornfeldtestifiedinhisdepositionintheBakalaractionthathehadcorrespondedwithDr.Leopoldin1998andtoldhimthatheacquired"DeadCityIII,"aswellastherestoftheSchielecollectionfeaturedinthe1956catalog,fromMathilde,whodiedin1979.ThisisthefirsttimeKornfeldstatedthathepurchasedtheSchielecollectioninhis1956catalogfromMathilde.



Followingabenchtrial,theDistrictCourtmadeanumberoffactualdeterminations,includingthatGrunbaumhadpossessedthedrawingpriortoWorldWarII(Bakalar,819FSupp2dat295).ItalsofoundthatKornfeldhadpurchasedthedrawingfromMathildein1956andthatBakalarhadpurchasedthedrawingingoodfaithin1964(id.).Thecourtexplainedthattheheirshadfailedtoproduce"anyconcreteevidencethattheNazislootedthedrawingorthatitwasotherwisetakenfromGrunbaum"andthatthe"mostreasonableinference...isthatthe[d]rawingremainedintheGrunbaumfamily'spossession"throughoutWorldWarII(id.at297,298-299[internalquotationmarksomitted]).

However,theDistrictCourtfoundthat,"Bakalarc[ould]notestablishbyapreponderanceoftheevidencethatGrunbaumvoluntarilyrelinquishedpossessionofthe[d]rawing,orthathedidsointendingtopasstitle"(id.at300).ThecourtalsofoundthatMathildehadnotacquiredvalidtitletothedrawing(id.at302-303).Nonetheless,theDistrictCourtawardedthedrawingtoBakalaronthegroundoflaches(id.at305-306).

TheSecondCircuitaffirmedinasummaryorder,[FN15]observingthattheDistrictCourt'sfindingthatthedrawinghadnotbeenlootedbytheNaziswasnot"clearlyerroneous"(Bakalar,500FedAppxat8).However,theCourtexplicitlydeclinedtoruleonwhetherMathildehadacquiredpropertitletothedrawing.Instead,itaffirmedtheDistrictCourt'sfindingthatlachesapplied(id.at9).

ThisActiontoRecovertheArtworks:"WomanHidingHerFace"(1912)and"WomaninaBlackPinafore"(1911)

BycomplaintdatedMarch18,2016,plaintiffsfiledsuitagainstdefendantsclaimingarightofreplevinandconversionandaviolationofNewYorkGeneralBusinessLaw§349andseekingadeclaratoryjudgmentthattheyhaveownershipoftheArtworks.ThecomplaintannexedvariousdocumentsconcerningtheGrunbaums,includingtheKieslingerinventory,thepowerofattorneyandthepropertydeclarationsofGrunbaumandElisabeth.

Alsoannexedtothecomplaintisanemailfromplaintiffs'counseltodefendants,datedNovember13,2015,advisingdefendantsthatplaintiffshadlearnedthatdaythatdefendantswereofferingtwoSchielepieceswithacknowledgedGrunbaumprovenanceforsale.TheArtworkswerethepiecesatissuehere,"WomaninaBlackPinafore"(1911),listedasnumber21inthe[*7]1956catalog,and"WomanHidingHerFace"(1912),listedasnumber22inthe1956catalog.Additionally,plaintiffsannexedaletterdatedOctober6,2004,fromtheArt



LossRegister,[FN16]statingthat"Girl[sic]ina[Black]Pinafore"wasnotintheirdatabase,butthatitwasdefinitelyaSchielefromtheGrunbaumcollectionandinlightofthe"DeadCityIII"litigation,therewasa"remote""chanceofatitleclaim"againstthework.

DefendantRichardNagy,whohasbeenanindependentartdealersince1980,firstobtaineda50%sharein"WomaninaBlackPinafore"fromThomasGibsonFineArtonor

aroundFebruary24,2005,thedayafteritsunsuccessfulauctionatSotheby's[FN17].InOctober2011,he"voided"hisinterest,giventheambiguityandproblemswiththeprovenance.However,hereacquiredhisinterestinthepieceonoraroundDecember9,2013,soonaftertheSecondCircuitaffirmedthedismissaloftheplaintiffs'claimsinBakalar(seeBakalar,500FedAppxat6).

Nagyacquired"WomanHidingHerFace"onDecember18,2013.TheArtSaleandTransferAgreement(theAgreement)for"WomanHidingHerFace"statesthat"theheirsofFritzGrunbaumclaimownershipofthePaintingonthetheorythatitwasstolenfromMr.GrunbaumwhenhewasdeportedtoaGermanconcentrationcampduringWorldWarII."Nagyagreedthathewouldhavenoclaimagainsttheselleriftitleweredeclaredinvalidonthatbasis.TheAgreementlistedtheprovenanceofthework,asperSotheby's,asfollows:

"FritzGrunbaum,Vienna(until1941);

"ElisabethGrunbaum-Herzl(widowoftheaboveuntil1942);

"MathildeLukacs-Herzl(sisteroftheabove);

"Gutekunst&KlipsteinBern,sellingexhibition1956,No.22(purchasedfromabove);"

andsixsubsequentpurchasers,thelastofwhomNagyacquireditfrom.

Additionally,pursuanttothetermsoftheAgreement,onJanuary16,2014,Nagypurchasedtitleinsurancefor"WomanHidingHerFace,"whichacknowledgedthatthepiecewasregisteredas"LostArt"andthatclaimshadbeenmadebyGrunbaum'sheirsthatitwaslootedbytheNazisduringWorldWarII.

DefendantsmovedtodismisstheactionpursuanttoCPLR3211,arguing,interalia,thatBakalarcollaterallyestoppedplaintiffsfrompursuingtheirclaims.SupremeCourt,NewYorkCounty(CharlesE.Ramos,J.),deniedthemotion.Onappeal,wemodifiedbydismissing



plaintiffs'GeneralBusinessLaw§349claim,andotherwiseaffirmed(149AD3d532[1stDept2017]).Weexplained:

"Collateralestoppelrequirestheissuetobeidenticaltothatdeterminedinthepriorproceeding,andrequiresthatthelitiganthadafullandfairopportunitytolitigatetheissue.Neitherofthoserequirementshasbeenshownherewherethepurchaser,thepieces,andthetimeoverwhichthepieceswerehelddiffersignificantly.Thethreeworksarenotpartofacollectionunifiedinlegalinterestsuchtoimputethestatusofonetoanother"

(id.at533[internalcitationsomitted]).

Thereafter,plaintiffsmovedforsummaryjudgmentontheirclaimsforreplevinand

[*8]conversion,supportedbyanexpertreportbyJonathanPetropoulos[FN18]andanexpert

opinionofKathrinHofer.[FN19]

Nagycross-movedforsummaryjudgment,arguingthattherewasalackofevidencethatGrunbaumeverownedtheArtworks,and,rather,thattheevidenceshowedthattheArtworkswerealwayspossessedbyMathildeandneverstolenbytheNazis.Nagyassertedthathewasagoodfaithpurchaserandthatplaintiffshadfailedtotimelypursuetheirclaim.Nagyrelied

upontheexpertreportsofDr.SophieLillie,[FN20]LynnNicholas,[FN21]LaurieStein[FN22]

andDr.AugustReinisch[FN23].HealsosubmittedcorrespondenceallegedlybetweenKornfeldandMathilderegardingthe1956saleoftheSchieleCollection.

SupremeCourtgrantedplaintiffs'motionforsummaryjudgment(61Misc3d319[SupCt,NYCounty2018]).ThecourtconcludedthattheArtworksbelongedtoGrunbaumpriortoWorldWarIIandthattheywerelootedbytheNazis.SupremeCourtfoundthatplaintiffshadmade"athresholdshowingthattheyhaveanarguableclaimofasuperiorrightofpossessiontotheArtworks,andthattheArtworksareintheunauthorizedpossessionofanotherwhoisactingtoexcludeplaintiffs'rights"(id.at325).Accordingly,thecourtheldthattheburdenofproofhadshiftedtodefendants(id.at325-326)andfoundthat"[d]efendantshaveneitherpresentedevidencenorraisedatriableissueoffacttoshowthatMr.Grunbaumvoluntarilytransferredthesubjectartworksduringhislifetime"andthat"anyevidencethatMs.[Mathilde]LukacspossessedgoodtitletotheArtworksisabsentfromtherecord"(id.at326).

Discussion

ReplevinandConversion



"Aconversiontakesplacewhensomeone,intentionallyandwithoutauthority,assumesorexercisescontroloverpersonalpropertybelongingtosomeoneelse,interferingwiththatperson'srightofpossession'"(WilliamDoyleGalleries,Inc.vStettner,167AD3d501,505[1stDept2018],quotingColavitovNewYorkOrganDonorNetwork,Inc.,8NY3d43,49-50[2006];seealsoSolomonR.GuggenheimFound.vLubell,153AD2d143[1stDept1990],affd77NY2d311[1991])."Twokeyelementsofconversionare(1)plaintiff'spossessoryrightor[*9]interestintheproperty;and(2)defendant'sdominionoverthepropertyorinterferencewithit,inderogationofplaintiff'srights"(Colavito,8NY3dat50[internalcitationsomitted]).Whereaparty'sinterestsinpropertyhavebeensold,therecanbenointerferencewiththeirpropertyrightsandaconversionclaimmaynotbemaintained(seePappasvTzolis,20NY3d228,234[2012]).

Tostateacauseofactionforreplevin,aplaintiffmustestablishasuperiorpossessoryrighttopropertyinadefendant'spossession(seePivarvGraduateSchoolofFigurativeArtofN.Y.AcademyofArt,290AD2d212,213[1stDept2002]).

Here,wefindthatplaintiffshavemadeaprimafacieshowingofsuperiortitletotheArtworksbasedonevidencethatestablishesthefollowing:(1)GrunbaumownedtheArtworkspriortoWorldWarII;and(2)GrunbaumnevervoluntarilyrelinquishedtheArtworks.

1.GrunbaumownedtheArtworkspriortoWorldWarII.

DefendantsarguethatplaintiffssubmittedinsufficientproofofGrunbaum'sownershipoftheArtworks.Wedisagree.WhilethespecificworksinquestionarenotnamedintheinventoriesofGrunbaum'spropertyortheprewarcatalogs,thereissufficientproofofGrunbaum'sownershipoftheArtworksbeforeWorldWarII.

a."DeadCityIII"isofGrunbaumprovenance.

The1956catalogcontainedmanySchieles,including"DeadCityIII,""SeatedWomanWithBentLeftLeg(Torso)"andtheArtworks.However,Kornfeldonlyattributed"DeadCityIII"toGrunbaum.Mathildeisnotincludedintheprovenancelistedfor"DeadCityIII."Therefore,itisundisputedthatatleastoneoftheSchielesinthesamecollectionastheArtworksoriginatedfromGrunbaum.

http://www.nycourts.gov/reporter/3dseries/2018/2018_08743.htm





b.Federalcourtsconcludedthat"SeatedWomanWithBentLeftLeg(Torso)"hasaGrunbaumprovenance.

InBakalar,theDistrictCourtfoundthatanotherSchieleinthe1956catalog,"SeatedWomanWithBentLeftLeg(Torso),"hasaGrunbaumprovenance.Inreachingthisconclusion,thecourtreliedinpartonKornfeld's2007testimonywhereheadmittedthatalltheSchieleworksinthe1956catalogwereoriginallyfromtheGrunbaumcollection.A2004emailfromGalerieKornfeldalsoconfirmedthattheprovenanceofalltheSchielesfeaturedinthe1956catalogwasGrunbaum.

Furthermore,defendantsintheiranswerinthisactionadmitthattheArtworksshareanestablishedanddocumentedhistoricalprovenancewith"SeatedWomanWithBentLeftLeg(Torso)"and"DeadCityIII."However,defendantsarguethatallsharetheLukacs-Kornfeldprovenance,explicitlyignoringtheconclusionsmadebytheDistrictCourtinBakalar,discussedsupra.

Plaintiffs'expertPetropoulosalsoreliesonboththeDistrictCourtandtheSecondCircuitBakalardecisions,concludingthatthis,pairedwithotherrelevantevidence,supportsthefindingthattheArtworksweredefinitivelyoftheGrunbaumcollection.PetropoulosnotesthatdefenseexpertLillieagreedinherreportanda2005articleshewroteabout"DeadCity

III"thattheSchielesinthe1956catalogallsharedthesameprovenance.[FN24]

PetropoulosalsoopinesthatthereisdocumentaryevidencethatthecollectionwastransferredtoanAryanTrusteepriorto1940.Hemaintainsthatthegapsintherecorddonotsuggest,asdefendants'expertsstate,thattheartwasreturnedtothevictims.ThiswasneverstandardNazipractice.Rather,itstronglysuggeststhatformerNazistookandsoldtheArtworksinthethrivingblackmarketforstolenartinpostwarEurope.HeexplainedthatthisisthereasonwhytheGrunbaumcollectionwaskeptlargelyintactduringthewar,asevidencedbythefactthatKornfeldsoldapproximately80%ofitinthemid-1950s.

Petropoulosstatesthatthereareanumberofindividualswhowouldhavebeencapableofstealingthecollection,includingKieslingerandRochlitzer.KieslingerwasaknownadmirerofSchiele,andworkedwithDr.KajetanMuhlmann,aNazicolonel,knownasoneofthemostprolificartplunderersinhistory.



HeaddsthatOttoKallirpurchasedtheworksfromKornfeldin1956withtheknowledgethattheyhadbelongedtoGrunbaum.OttoKallirandGrunbaumwerefriendsbeforethewarandthereisevidencethatOttoKallirhadinspectedGrunbaum'sSchielecollectioninthelate1920s.

Finally,PetropoulosstatesthatsincetheBakalarruling,newevidencehascometolightthatKornfeldwasfoundbyGermanandSwissgovernmentstobeanindividualwhotraffickedinNazilootedart.KornfeldwastheartdealerforCorneliusGurlitt,purchasing11worksin1988ofwhatKornfeldcalled"degenerateart."AraidonGurlitt'shome,knownas"the2012MunichArtworksDiscovery,"revealedoveronethousandpiecesofart,withavalueofover$1billion,lootedbytheNazisduringthewar.Gurlitt'sfather,HildebrandGurlitt,adealerappointedbyJosephGoebbelsandHermannGoeringtoparticipateintheNaziconfiscationofJewish-ownedart,retainedpiecesforhis"personalcollection."CorneliusGurlitthadagreedtocooperatewiththeGermangovernmentbutdiedshortlyaftertheseizure.Noonewaseverprosecutedforthethefts.

c.KornfeldexplicitlyacknowledgedthattheArtworksinthe1956catalogshareaGrunbaumprovenance.

KornfeldtestifiedinhisMay25,2007depositionintheBakalaractionthatheacquiredtheSchielesinthe1956catalogthroughMathilde.HetestifiedthatheonlyknewoftheGrunbaumprovenanceoftheseSchieleartworksbecauseofthe1998"DeadCityIII"

proceeding[FN25].HealsostatedthathedidnotknowthattheArtworkswereoriginallyGrunbaum'swhenhepurchasedthemfromMathildein1956.

Plainly,Kornfeld'stestimonythathedidnotknowoftheGrunbaumprovenanceofatleastsomeoftheSchielesin1956isfalse,ashelisted"DeadCityIII"asoriginatingfromGrunbaum.Kornfeldtestifiedthatapartfromhisconsultationofthe1930catalogincreatingthe1956catalog,hehadneverheardofGrunbaum.However,therewerethreeSchieleslistedinthe1930catalogattributedtoGrunbaum'scollection,whileKornfeldchoseonlytolistone,"DeadCityIII,"asexplicitlyattributedtoGrunbauminthe1956catalog.HeintentionallyomittedGrunbaum'sprovenanceastotheothertwoSchieles.

Moreover,priortothe1998seizureof"DeadCityIII,"Kornfelddeniedevercorrespondingwith[*10]Mathilde.However,aftertheseizureKornfeldclaimedthattheArtworkshadprovenancethroughMathilde.WhileKornfeldtestifiedin2007thatheacquired



theSchielesfromMathildein1956,hernamedoesnotappearinthe1956catalog.NordoesMathilde'snameappearinOttoKallir's1966updateofhis1930catalogastheprovenancefortheSchieleworks.HeincludesGalerieKornfeldandhisownGalleryintheprovenance.ThisupdatewasmadeafterOttoKallirpurchasedthecorrespondingSchielesfromKornfeld.Additionally,OttoKallir'sgranddaughter,JaneKallir,alsomakesnomentionofMathildeintheprovenancehistoriesofher1988catalogofSchieleartworks.

FurtherprovingthatheknewoftheprovenanceoftheArtworks,Kornfeldadmittedthatin2001hehadwrittentoDr.Leopold,whohadamassedtheLeopoldCollectioncontaining"DeadCityIII,"statingthatMathildehadtoldhiminthe1950'sthattheentireSchielecollectionatissuehadbeenheldinstorageatSchenker,butnotsoldduringWorldWarII,andwasthenretrievedbyMathildeafterthewar.Hemaintainedthatwhenheaskedheroftheirorigin,Mathildeallegedlytoldhimtheywere"anoldViennesefamilypossession"andhedeclinedtoinquirefurther.

TherecordspurportingtoshowthatMathildesoldatotalof113worksofarttoKornfeldfrom1952through1956atbestareinconclusive.KornfeldacknowledgedinhisdepositionthattherecordsheproducedhadMathilde'ssignatureandnameaddedinpencil,whiletherestofthepagewaswritteninink.Healsoadmittedthathernamewasnotaddedcontemporaneouslywiththepurchase.KornfeldconfirmedthatMathilde'ssignatureonkeydocumentswasmisspelledandhersignaturedidnotappearinherhandwriting.Kornfeldsurmisedthatthesignaturecouldhavebeenhersecretary's.PetropoulosstatesthatKornfeldrefusedtoallowtheoriginaldocumentstobeexaminedbyahandwritingexpert.

WenotethatKornfeldacquiredthreenon-Schielepiecesaspartofhisacquisitionofartworksin1956.Grunbaum's1939propertydeclarationspecificallyliststhethreenon-

SchielepiecesacquiredbyKornfeld[FN26].Accordingly,itisclearthattheArtworksherewereobtainedbyKornfeldfromthesameseller-whetherornotthatsellerwasMathilde-asatleastfourotherpiecesthatcanconclusivelybetracedtoGrunbaum'scollection.

d.AdditionalevidencethattheArtworksshareaGrunbaumprovenance.

JaneKallirexplicitlyattributestheprovenanceoftheArtworkstoGrunbauminherdeposition.Shetestifiedthatin1956,OttoKallir,afriendofKornfeldandafriendofGrunbaumwithdirectknowledgeofhisSchielecollection,havinginspectedandcatalogueditinthe1920s,purchasedtheentireSchielecollectionfeaturedinthe1956cataloguefrom



Kornfeld.JaneKallirhadknowledgeofthepiecesaswell,andshelistedtheArtworksbytheircurrenttitlesinher1988publication.

Furthermore,theArtLossRegistrylists"Girl[sic]ina[Black]Pinafore"asaSchiele[*11]fromtheGrunbaumcollection,andGalerieKornfeldconfirmedviaanemailin2004statingthattheprovenanceoftheArtworkswasGrunbaum.

Additionally,whenNagyreacquired"WomanHidingHerFace,"theAgreementlistedtheprovenanceofthework,asperSotheby's,asbeingFritzGrunbaum(until1941),ElisabethGrunbaum-Herzl(until1942)andMathildeLukacs-Herzl.

e.DefenseexpertsspeculatethatMathildehadpossessionandtitleoftheArtworks.

Defendantsarguethatplaintiffsdidnot"conclusively"provethattheArtworksbelongedtoGrunbaum.However,conclusiveproofisnotrequiredtoshifttheburdentodefendants."Apartymovingforsummaryjudgmentmustmakeaprimafacieshowingofentitlementtojudgmentasamatteroflaw,producingsufficientevidencetodemonstratetheabsenceofanymaterialissueoffact"(GiuffridavCitibankCorp.,100NY2d72,81[2003])."Oncethisshowinghasbeenmade,theburdenshiftstothenonmovingpartytoproduceevidentiaryproofinadmissibleformsufficienttoestablishtheexistenceofmaterialissuesoffactthatrequireatrialforresolution"(id.).

Defendants'experts'speculationsareunsupportedbytheevidenceintherecordandareinsufficienttodefeatsummaryjudgment(MitchellvAtlanticParatransofNYC,Inc.,57AD3d336,337[1stDept2008]["Theconclusorystatementsof...experts,unsupportedbyanyprobativeevidence...areinsufficienttodefeatsummaryjudgment"];seealsoBacanivRosenberg,74AD3d500,503[1stDept2010]["Anexpert'saffidavitcontainingbareconclusoryassertionsisinsufficienttodefeatsummaryjudgment"],lvdenied15NY3d708[2010];WrightvNewYorkCityHous.Auth.,208AD2d327,331[1stDept1995]["Itiswellsettledthatanexpert'saffidavitwhichcontainsbareconclusoryassertionsisinsufficienttodefeatsummaryjudgment.Whileanexpertmay,inhisareaofexpertise,reachconclusionsbeyondthekenoftheordinarylayman,hemayonlydosoonthebasisoftheestablishedfacts.Hemaynothimselfcreatethefactsuponwhichtheconclusionisbased"]).

DefendantsarguethattheArtworksbelongedtoMathilde.However,theydonotexplainhowMathildewasabletoacquiretheArtworkseitherduringthewaroruponherreturnvisits




toViennaafterthewar.NordodefendantsraiseatriableissueoffactthatMathildehadvalidtitletotheArtworks.

Elisabethconfirmedinher1941statementbeforeanAustriannotarythattherewerenoremainingassetsinGrunbaum'sestateafterhismurder.Therewerenorecordsshowingthat

ElisabethhadwithdrawnthecollectionfromSchenker[FN27]priortoGrunbaum'sdeathto

transferittoMathilde[FN28]oranyoneelse.

Furthermore,MathildeleftAustriainAugust1938,monthsbeforetheSchenkerexportpermitwasevenfiled,andwasimprisonedinaninternmentcampherselfforpartofthewar,[*12]makingitimprobablethatsheacquiredtheArtworksduringthewar.Defendants'expertSteindoesnotdisputethatMathildedidnotremovethecollectionwhenshefledAustria.SteinstatesthatrecordsshowthatElisabethpaidfeestoSchenkeratleastuntilJune1939.NordidtheArtworkspassthroughtheAlliedMonuments,FineArtsandArchivesprogram,aprogramestablishedin1943toaidinprotectingculturalpropertyinthewarzones,indicatingthattheywerenolongerwithSchenkerafterthewaralthoughtheyhadbeenplacedthereduringthewar.

LilliespeculatesthatitispossiblethatRochlitzerexportedthecollectionatElisabeth'sdirection.ShearguesthatRochlitzerwasbothalawyerandcomposer,sohewas"likely"acquaintedwiththeGrunbaumspriortothewar.LillieaddsthatRochlitzerhimselfwasarrestedbytheNazisthreetimesonsuspicionofaidingrefugeesinmovingvaluablesabroad;therefore,hemayhaveactedasanAryanTrusteefortheGrunbaumssimplyasa"ploy"toshieldtheirassetsfromtheNazis.SheopinesthatRochlitzer'sfeeof6,500RMcouldhaveprovidedcoverfortheGrunbaumstodisposeoftheartcollectiontohimsohecouldtransferthemtoMathilde.

Lilliehypothesizesthattheother"feasible"scenarioisthatElisabethgavethecollectiontoanon-Jewishwoman,Hassel,whoappearstohavehelpedotherVienneseJewsduringthe

war[FN29].AccordingtoLillie,thefactthatsomanyofSchiele'sworksremainedtogetherindicatesthatthecollectionremainedinthepossessionofaclosefamilyrelativeandthateitherRochlitzerorHasselprovideda"possible"modetotransfertheentirecollectiontoMathilde.



Further,defenseexpertSteinpositsthattheLukacseslikelytransferredtheArtworkswhentheyfledAustria,asthereisevidencethattheywereabletomoveagreatdealoftheirhouseholdassetsthroughSchenker,including"11oilpaintings,3watercolors,8graphics,and3drawings."SheadmitssuchatransferisunusualgiventhatforcedemigrationwasoftenusedbytheNazistoseizeproperty.

Theseopinionsarespeculative.First,therecordestablishesthatMathildeandherhusbandweredetainedandimprisonedbytheNazisinBrusselsfromOctober26,1943untiltheendofthewar.AsitwasstandardNazipracticetoconfiscateallpropertyownedbyJewsupontheirimprisonment,itisimprobablethatMathildecouldhaveacquiredGrunbaum's

Schielecollectionwhileimprisoned,asdefendants'expertsassert.[FN30]

Second,thereisnoevidencethatGrunbaumandRochlitzerwereacquaintedpriortothewar.Additionally,Rochlitzer'sfeewassubstantiallygreaterthanthelistedvalueoftheentireartcollection.Also,theevidenceintherecordmorecloselyreflectsthatElisabethpaidhisfeeoutofherownassets.Thereisnoevidentiarybasisfordefendants'experts'speculationsthatRochlitzer'sappointmentasAryanTrusteewasusedbyGrunbaumorElisabethasaploytotransfertheartcollectiontoMathilde.Moreover,ifRochlitzerdidsomehowtransfertheartcollectiontoMathildeatElisabeth'sbehest,hewouldhavehadtodosoduringthewarwhileMathildewasimprisoned,becauseRochlitzerwaskilledinanAlliedairstrikein1945.

Third,whileHasselmayhavehelpedJewstransfertheirpossessionstolovedones,there[*13]isnoevidencetosupportdefendants'experts'speculationsthatHasselhelpedElisabethtransfertheartcollectiontoMathilde.

Finally,theentireartcollectiondeclaredandexportedbytheLukacsestotals400RMandcontainedonly24pieces.TheGrunbaumcollectionwhichincluded81Schielesandmanyotherworkswasvaluedat5,791RM.Further,Mathildeallegedlysoldatleast110piecesofarttoKornfeldafterthewar,substantiallymorethanthe24piecesexportedbytheLukacsesaccordingtotherecord.Wenotethattherearenorecords,includinginvoices,checksorreceiptsdocumentingthattheArtworkswerepurchasedbyKornfeldfromMathilde.Moreover,evenifMathildehadpossessionofGrunbaum'sartcollection,possessionisnotequivalenttolegaltitle.

Accordingly,wefindthatplaintiffshavemettheirprimafacieburdenthattheArtworksbelongedtoGrunbaum.



2.GrunbaumdidnotvoluntarilyrelinquishtheArtworks.

UnderNewYorkcommonlaw,amanualtakingisnotnecessarytoshowthatawrongfulexerciseofdominionhasoccurredinordertoclaimconversionorreplevin(seeStatevSeventhRegimentFund,Inc.,98NY2d249,260[2002]).Accordingly,towhomGrunbaumlosttheArtworksisimmaterial.SupremeCourtwasnotrequiredtoconsiderspeculativetheoriesofdefendants'experts,inlightoftheundisputedfactsthattheartwasinventoried,anAryanTrusteewasappointedtoadministerGrunbaum'sartcollectionandGrunbaumwasexecutedduringtheHolocaust.

First,therecordestablishesthattheNazistrackedGrunbaum'spropertythroughthe

KieslingerinventoriesofGrunbaum'sartcollectionsignedbyOttoDemus,[FN31]theheadoftheNaziFederalMonumentsAgency,andstampedas"completed."Plaintiffs'expertPetropoulosopinesthatthisconclusivelymeantthatatthispointGrunbaumnolongerhadanycontrolofhisproperty.DefenseexpertLillieconcedesthispoint,statingthattheNazipolicywasthatallJewishassetslistedinanypropertydeclarationwereusuallyeffectivelyconfiscatedandavailabletotheReichafterNovember18,1938.

Second,Rochlitzer'sappointmentasanAryanTrusteeforGrunbaum'spropertyfurtherestablishesthatGrunbaumnolongerhadanyrightstohisproperty,asonlyhisAryanTrustee

couldtransferGrunbaum'spropertyatwill.[FN32]

Third,itisundisputedthatSchenker,theNazi-controlledshippingcompany,tookcontrolofGrunbaum'sproperty.TherearenodocumentsshowingthatthecollectionwasexportedfromSchenkerorthatRochlitzer'sappointmentwasevercanceled.Accordingly,neitherGrunbaumorElisabetheverreacquiredpossessionorcontroloftheArtworks.

Evenacceptingdefendants'speculationthatElisabethorMathildesomehowmanagedtoretrievetheArtworks,itwasstillmisappropriatedfrom,andlostto,Grunbaumandhislegalheirs.

DefenseexpertspositthatthepowerofattorneytransferringthepropertyfromGrunbaumtoElisabethwasvalid,or,alternatively,thattheArtworksweregivenasanintervivosgiftbyeitherGrunbaumorElisabethtoMathilde.DefenseexpertLillieconcedesthattheArtworksoncebelongedtoGrunbaum.However,sheassertsthatElisabethhadtheauthoritytotransfergoodtitletoMathilde.



ThereisnoevidenceintherecordthatElisabethtransferredtitletothecollection.NorwasElisabethabletoconveygoodtitleasGrunbaumsignedthepurportedpowerofattorneywhileimprisonedinDachau.Werejectthenotionthatapersonwhosignsapowerofattorneyinadeathcampcanbesaidtohaveexecutedthedocumentvoluntarily(Bakalar,819FSupp2dat298[theconcurrenceopinesthat"anytransfersubsequenttoGrunbaum'sexecutionofthepowerofattorneyatDachauwasvoidasaproductofduress"];id.at300[itwasnotestablishedthat"GrunbaumvoluntarilyrelinquishedpossessionoftheDrawing,orthathedidsointendingtopasstitle"];seealsoPhilippvFederalRepublicofGermany,248FSupp3d59,70[DDC2017],affd894F3d406[DCCir2018][thesaleofartduringtheHolocaustbyaJewishownerwascoercedandunderduress,coveredbybothHEARandaviolationofinternationallawsuchtobeanexceptiontotheForeignSovereignImmunitiesAct]).

WefindthatplaintiffshaveestablishedthatthepowerofattorneysignedbyGrunbaumwhileunderNazicontrolisaproductofduress,and,therefore,anysubsequenttransferoftheArtworksdidnotconveylegaltitle."[A]rtworkstolenduringWorldWarIIstillbelongstotheoriginalowner,eveniftherehavebeenseveralsubsequentbuyersandevenifeachofthosebuyerswascompletelyunawarethatshewasbuyingstolengoods"(BakalarvVavra,619F3d136,141[2dCir2010][internalquotationmarksomitted]).InNewYork,athiefcannotpassgoodtitle(seeLubell,77NY2dat320;FederalIns.Co.vDiamondKamvakis&Co.,144AD2d42,44,[1stDept1989],lvdenied74NY2d604[1989]).Therefore,evenassumingthatGrunbaumtransferredhiscollectiontoElisabeth,thetransferwasinvalid.Accordingly,MathildecouldnotpassgoodtitletoKornfeldand/orGalerieKornfeld.

Alternatively,defendantsclaimthatMathildewasgiftedtheArtworksbyGrunbaumpriortohisexecutionofthepowerofattorney,creatingavalidintervivosgift.Tocreateanintervivosgift,"theremustexisttheintentonthepartofthedonortomakeapresenttransfer;deliveryofthegift,eitheractualorconstructivetothedonee;andacceptancebythedonee"(GruenvGruen,68NY2d48,53[1986])."[T]heproponentofagifthastheburdenofprovingeachoftheseelementsbyclearandconvincingevidence"(id.).

Here,therecordisbereftofevidencethatGrunbaumorevenElisabethintendedtogifttheArtworkstoMathilde,letaloneanyevidenceofdeliveryoracceptance.SincethereisnoevidenceastohowMathildeacquiredtheArtworks,defendantshavenotraisedatriableissueoffactthatGrunbaumvoluntarilyrelinquishedpossessionoftheArtworks,orthathedidsointendingtopasstitle.



[*14]3.Lachesisnotabartoplaintiffs'claimstotheArtworks.

Lachesis"anequitablebar,basedonalengthyneglectoromissiontoassertarightandtheresultingprejudicetoanadverseparty"(SaratogaCountyChamberofCommercevPataki,100NY2d801[2003],816,certdenied540US1017[2003];MatterofSchultzvStateofNewYork,81NY2d336,348[1993]).Themerelapseoftime,withoutashowingofprejudice,isinsufficienttosustainaclaimoflaches(seeSaratoga,100NY2dat816;MaconvArnlieRealtyCo.,207AD2d268,271[1stDept1994];MatterofFlamenbaum,22NY3d962,966[2013]["theessentialelementoflaches[is]prejudice"][internalquotationmarksomitted]).Prejudicemaybedemonstrated"byashowingofinjury,changeofposition,lossofevidence,orsomeotherdisadvantageresultingfromthedelay"(MatterofLinker,23AD3d186,189[1stDept2005][internalquotationmarksomitted]).

Werejectdefendants'argumentthatthedefenseoflachesisabartoplaintiffs'replevinandconversionclaims(seeB.N.RealtyAssoc.vLichtenstein,21AD3d793,799[1stDept2005]).Nagyacquiredbothpiecesin2013.Hesufferednochangeinposition.Norwasanyevidencelostbetweendefendants'acquisitionandplaintiffs'demandforthereturnoftheArtworks.Significantly,Nagywasonnoticeofplaintiffs'claimstotheGrunbaumcollectionpriortothepurchase,ashefiledabriefintheBakalaraction.Further,itisundisputedthat

NagypurchasedtheArtworksatasubstantialdiscount[FN33]fromthepricesoughtbySotheby'spriortotheclaimbeingpublicized,andheobtainedinsurancefortheverypurposeofinsuringtitleagainstplaintiffs'claims.

TheBakalarcourtpointedtoMathilde'sdeathasaprejudice.Mathilde,andotherwitnesseshaddiedwellbeforeNagypurchasedtheArtworks.Inanyevent,aswealreadydiscussed,MathildecouldnothaveshownshehadgoodtitletotheArtworksandhertestimonywouldnothavebeenprobative(seeMatterofFlamenbaum,22NY3dat966["althoughthedecedent'stestimonymayhaveshedlightonhowhecameintopossessionofthe[artwork],wecanperceiveofnoscenariowherebythedecedentcouldhaveshownthatheheld[good]title"]).

4.Plaintiffsarenotentitledtoattorneys'fees.

ItiswellsettledinNewYorkthatattorneys'feesareconsideredanincidentoflitigationandarenotrecoverableunlessauthorizedbystatute,courtrule,orwrittenagreementoftheparties(seeHooperAssoc.vAGSComputers,74NY2d487,491-492[1989];seealso







MadisonParkDev.Assoc.LLCvFebbraro,159AD3d569[1stDept2018]).Anexceptiontothatgeneralruleexistswhenpartieshave"actedwithdisinterestedmalevolence[andhave]...intentionally[sought]toinflicteconomicinjuryon[anotherparty]byforcing[himorher]toengagelegalcounsel"(BrookShoppingCtrs.vBass,107AD2d615,615[1stDept1985],appealdismissed65NY2d923[1985];seePalermovTaccone,79AD3d1616[4thDept2010][attorneys'feesdeniedinconversionevenwherethedefendantlockeduptheplaintiff'sequipmenttointentionallypreventaccess];AnniszkiewiczvHarrison,291AD2d829,830[4thDept2002],lvdenied98NY2d611[2002]).

SupremeCourtgrantedattorneys'feesonafindingof"badfaith."However,moreisrequiredthanbadfaith.WefindthatNagydidnotactwith"disinterestedmalevolence."Rather,hemadeabusinesscalculationtopurchasetheArtworksknowingthattitlewascloudyyet[*15]believingthattitlecouldpossiblybesuccessfullydefended.

Accordingly,wemodifySupremeCourt'sdecisiontodenythemotionastoattorneys'fees.

Conclusion

Weendbynotingthatinaneffortto"ensurethatlawsgoverningclaimstoNazi-confiscatedartandotherpropertyfurtherUnitedStatespolicy,"andthat"claimstoartworkandotherpropertystolenormisappropriatedbytheNazisarenotunfairlybarredbystatutesoflimitations,"CongressenactedtheHolocaustExpropriatedRecoveryActof2016(HEARAct)(PubLNo114-308,§3[2016]).

InpromulgatingtheHEARAct,Congressfoundthat(1)theNazis"confiscatedorotherwisemisappropriatedhundredsofthousandsofworksofart"(HEARAct,Sec.2[1])fromJewsandotherstheypersecuted,andthatmanyworks"wereneverreunitedwiththeirowners"(Sec.2[2]);and(2)theNazivictimsandheirshavesoughtlegalrelieftorecoverartwork,butthey"mustpainstakinglypiecetogethertheircasesfromafragmentaryhistorical

recordravagedbypersecution[and]war"(Sec.2[6]).[FN34]

ThetragicconsequencesoftheNazioccupationofEuropeonthelives,libertyandpropertyoftheJewscontinuetoconfrontustoday.WeareinformedbytheintentandprovisionsoftheHEARActwhichhighlightsthecontextinwhichplaintiffs,wholosttheirrightfulpropertyduringWorldWarII,beartheburdenofprovingsuperiortitletospecific





propertyinanactionunderthetraditionalprinciplesofNewYorklaw.WealsonotethatNewYorkhasastrongpublicpolicytoensurethatthestatedoesnotbecomeahavenfortraffickinginstolenculturalproperty,orpermittingthievestoobtainandpassalonglegaltitle(seee.g.Lubell,77NY2dat320;Reif,149AD3dat533).Itisimportanttonotethatwearenotmakingadeclarationasamatteroflawthatplaintiffsestablishedtheestate'sabsolutetitletotheArtworks.Rather,weareadjudicatingtheparties'respectivesuperiorownershipandpossessoryinterests.WefindthatplaintiffshavemettheirburdenofprovingsuperiortitletotheArtworks.Defendantsraisenotriableissueoffact.

Accordingly,theorderoftheSupremeCourt,NewYorkCounty(CharlesE.Ramos,J.),enteredonoraboutJune11,2018,which,interalia,grantedplaintiffs'motionforsummaryjudgmentontheirclaimsofreplevinandconversionanddirectingdefendantstoreturntheArtworkstoplaintiffs,andforanawardof

damages,costsandattorneys'fees,shouldbemodified,onthelaw,todenythemotionastoattorneys'fees,andotherwiseunanimouslyaffirmed,withcosts.

Allconcur.

Order,SupremeCourt,NewYorkCounty(CharlesE.Ramos,J.),enteredonoraboutJune11,2018,modified,onthelaw,todenythemotionastoattorneys'fees,andotherwiseaffirmed,withcosts.

OpinionbySingh,J.Allconcur.

Sweeny,J.P.,Richter,Tom,Kern,Singh,JJ.

THISCONSTITUTESTHEDECISIONANDORDER

OFTHESUPREMECOURT,APPELLATEDIVISION,FIRSTDEPARTMENT.

ENTERED:JULY9,2019

CLERK

Footnotes

Footnote1:GrunbaumwasalsoadoctorofthelawandveteranofWorldWarI.Hisjokes



oftentargetedtheNazis.HisfameinViennawassuchthatthereisasquarenamedafterhim,"FritzGrunbaumPlatz."

Footnote2:Kristallnacht,Germanfor"crystalnight"or"nightofbrokenglass,"occurredonNovember9—10,1938.Duringthesedays,NazisattackedJewishpersonsanddestroyedtheirproperty.ThenameKristallnachtreferstothelitterofbrokenglassleftinthestreetsaftertheseorganizedriotstookplace(seehttps://www.britannica.com/event/Kristallnacht[lastaccessedJune10,2019]).Quotinghistorians,plaintiffs'expertPetropolousnotesthatKristallnacht"inauguratedthedefinitivephaseof...thecoercedexpropriationofGerman-Jewishproperty...[evencalling]forrobbingtheJewsoftheirapartments."

Footnote3:TheNazisenactedaregulationonApril26,1938,requiringJewswithholdingsofmorethan5,000RMtodeclarealloftheirassets.Baseduponthatdeclaration,aJewwouldthenbesubjecttoatax,calledan"expiationfine,"intheamountof20%ofallassets.ByTheOrdinanceonTheUseofJewishProperty,enactedJanuary16,1938,allpropertyheldbyJews,includingartvaluedinexcessof1,000RMwasdeclaredtobepropertyoftheThirdReich.Remainingpropertywouldbeheldbytrustees,whopermittedonlythewithdrawalofsubsistenceamounts.TheOrdinanceontheSeizureofAssetsofEnemiesofthePeopleandtheStateinAustria,enactedNovember18,1938,legitimizedtheconfiscationofallJewishassetsinfavoroftheReich,andonJuly11,1939,itwasdeclaredthatallJewsweretobestrippedoftheircitizenship,andreiteratedthatalloftheirpropertywasforfeitedtotheThirdReich.

Footnote4:TheUSWarDepartmentconfirmedNazicontrolofSchenkerinaletterdatedOctober19,1945.

Footnote5:SchenkerwasadefendantintheBakalarlitigation(discussedinfra).Itclaimedthatitsheadquartersandwarehousesweredestroyedduringthewar,andthusithadnoadditionalrecords.

Footnote6:Whiletheseinventories,noticesandrequestsarenotintherecord,thesefactsandconclusionsarestatedintheResolutionoftheMichalekCommissionoftheAustrianArtRestitutionCommission,datedNovember18,2010.

Footnote7:AnAryanTrusteewas"anadministratorcommissionedby"theNazisforJewishownedassets,asitwasillegalforJewstopossessthepropertyintheirpropertydeclarationsafterNovember8,1938.

Footnote8:Ingeneral,USCourtshavefoundthat"NazipersecutorypolicytowardtheJews...hadthreemaincomponents:1)allJewsfirstwereconfinedinghettosandissuednewidentificationpapersthatidentifiedthemasJews;2)nearlyalloftheseJewslaterwereforciblyremovedfromtheghettoforsubsequentmurdereitherbyshootingorgassing;and3)alimitednumberofJewswhomtheGermansconsideredworkcapable'temporarilyweresparedandweretransferredtoforcedlaborcampswheremanydiedfromstarvation,disease



andotherinhumaneconditions"(UnitedStatesvFirishchak,426FSupp2d780,785[NDIll2005],affd468F3d1015[7thCir2006]).

Footnote9:Vavraisatestamentaryheir(bywill)ofMartaBakalova,Zozuli'sdaughter,whodiedin1996.MartaBakalovawastheheirtoZozuli,whodiedin1977.

Footnote10:VavralivedbehindtheIronCurtainuntil1989andthereistestimonyintherecordthathewasunabletoeffectivelypursueheirshipclaimswhilebehindit.

Footnote11:Acatalogueraisonnéisacomprehensive,annotatedlistingofallknownartworksbyanartist.

Footnote12:Whilethe1928catalogexplicitlyattributesfourSchieleworkstoGrunbaum,the1930catalogonlyincludesthreeworks.

Footnote13:DefenseexpertLaurieA.Steinstatesthat"[t]hepaucityofdetailedandillustratedpublishedinformationaboutSchiele'sworksonpaper(whichhadlittlemonetaryvalueatthetime)hinderedawarenessofwhichobjectsspecificallymayhavehadprovenancetoGrunbaum...."Further,Kornfeldtestifiedathisdepositionthathecreatedhisowntitlesas"[n]oneoftheleaveshadanynamesandhadtobewrittenupon,described....[Therefore,oftentherewas]thesameworkbytwodifferentnames...[and]titlec[ould]changeonceyouprocess[ed]thepieceofart."

Footnote14:AsecondSchiele"PortraitofWally"wasalsoonloanfromtheLeopoldFoundationandexhibitedatMOMAinlate1997.Theheirs,differentfromthoseinthiscase,laidclaimtoitandthemattersettledfor$19millionwhiletrialwaspending.

Footnote15:USCourtofAppealsfortheSecondCircuit,LocalRule32.1.1(b)statesthat"Rulingsbysummaryorderdonothaveprecedentialeffect."

Footnote16:TheArtLossRegisteroperatesadatabaseofpiecesstolenormissing(http://www.artloss.com/en[lastaccessedJune11,2019]).

Footnote17:PriortoThomasGibson,thepaintinghadpassedthroughseveralowners.

Footnote18:PetropoulosisaProfessorofEuropeanHistoryandDirectoroftheCaliforniaCenterfortheStudyoftheHolocaust,Genocide,andHumanRights,andformerResearchDirectorforArtandCulturalPropertyonthe2001PresidentialCommissiononHolocaustAssetsintheUnitedStates.

Footnote19:HoferisanAustrianattorney-at-law.

Footnote20:LillieisanindependentscholaronVienneseArtpriorto1938.



Footnote21:NicholasistheauthorofseveralbooksonthelootingofartbytheNaziregime.

Footnote22:Steinisacuratorandspecialistin19th-20thCenturyGermanArt.

Footnote23:ReinischisaprofessorofinternationallawattheUniversityofViennaandhaswrittenonissuesincludingHolocaust-relatedpropertyrestitution.

Footnote24:Inherrebuttal,Lillieexplainsthatin2005,shehadfoundnoevidencethatElisabethgiftedMathildethecollection,thatKieslingerhadlootedthecollection,orthatthecollectionhadbeenlootedbyotherNazis.Lilliestillconcludesthough,bystatingthatthecollectionwasinthepossessionofMathildeanddoesnotdenythatitwasoriginallyGrunbaum's.

Footnote25:Healsostatedthathehadnopersonalknowledgeconcerningtheirprovenance.

Footnote26:Specifically,Kornfeld'sledgersreadsthatheacquired"EggerLienz,2[S]oldiersin[B]lue[U]niforms,""awatercoloroncardboard61x43"and"Kokoschka,1drawing,charcoal,femalehead,"and"[Kokoschka],1drawing,pencil,femalehead."Grunbaum'spropertydeclarationfrom1939readsthathepossessed"17.Egger-Lienz,2soldiersinfrontofmountainlandscape,watercolour"and"40.2largeKokoschkas,femaleheads,handdrwg."

Footnote27:PetropoulosnotesthatElisabethandGrunbaumwerelabeled"enemiesofthestate";thereforeitwasillegalforSchenkertoreleasethecollectiontothem.

Footnote28:PetropoulosaddsthatThomasBuomberger,aresearcheroftheGrunbaumcollection,statesthat,practically,MathildegettingintouchwiththeNazisoverthecollectionwouldhavemeantherriskingherlife.Eitherway,shedidnotsmuggletheartinasuitcase,asDr.Leopoldsuggests,sincetheArtworkswerestilllistedinSchenkerandthepropertydeclarationsafterMathildehadfled.

Footnote29:LilliebasesthisonlyontheexistenceofaletterbyanotherJewishwomantoherdaughter.WhilethatlettermentionsHasselandElisabethbyname,itonlynotesthatthiswomanleftitemsforherdaughterwithHasselforherdaughtertoclaimafterthewar.

Footnote30:Whiledefendants'expertsdonotexplicitlystatethatMathildeacquiredtheArtworkswhileimprisonedbytheNazis,theydocontendthatsheacquiredthemduringthewar,whichisthetimeshewasimprisoned.

Footnote31:TheNazipolicywasthatallJewishassetslistedinanypropertydeclarationwereeffectivelyconfiscatedandavailabletotheReichafterNovember18,1938.Petropoulosaddsthatdefendants'expertLillieopinedatonepointthattherewasalsonowayforJewsto



legallytransferpropertyabroadafterthisdate.Infact,Lillieopinedthatwhilethiswasnotalwayssynonymouswithconfiscationorseizure,assetslistedinapropertydeclarationwereoftenplundered.However,shefoundthattherewasnoevidenceintherecordthattheGrunbaumcollectionwaslootedbytheNazis.ShealsostatedthattherewasonlyautomaticconfiscationofpropertybytheNaziswhenElisabethwasdeportedtoMalyTrostinec.

Footnote32:TheAryanTrusteeLawofDecember3,1938,statesthat,"[u]ponthedeliveryoftheorderonthebasisofwhichatrusteeisappointedaccordingtoParagraph2,theownerofthebusinessenterpriseisdeprivedofhis/herrighttodisposeoftheassetswhichareadministeredbytheappointedtrustee."PetropoulosexplainsthatthislawrenderedJewslegallypowerlesstotransferanyproperty.

Footnote33:Nagydidnotsubmitanaffidavitdisputingplaintiffs'assertionthattheArtworkswerepurchasedatasubstantialdiscount.

Footnote34:CourtshavegenerallyinterpretedtheHEARActliberally,focusingonthepurposeforwhichitwasenacted(seee.g.Philipp,248FSupp3dat70[thesaleofartduringtheHolocaustbyaJewishownerwascoercedandunderduress,coveredbybothHEARandaviolationofinternationallawsuchtobeanexceptiontotheForeignSovereignImmunitiesAct];DeCsepelvRepublicofHungary,859F3d1094,1110[DCCir2017],certdenied—US—,139SCt784[2019][amendmenttoaddHEARclaimpermittedalthoughstatestatuteoflimitationsexpired]).

ReturntoDecisionList

7/10/2019 Reif v Nagy (2019 NY Slip Op 05504) · 7/10/2019 Reif v Nagy (2019 NY Slip Op 05504)

Documents

Transcript of 7/10/2019 Reif v Nagy (2019 NY Slip Op 05504) · 7/10/2019 Reif v Nagy (2019 NY Slip Op 05504)