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High Court Urged to Hear Nazi Art Theft Case, With Dealer Saying NY State Decisions Should Give Way

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New York Law Journal 11 February 2020
By Jane Wester

The Court of Appeals must review the lower state courts’ rulings, Charron wrote, because they created “novel rules” of collateral estoppel and laches that could affect a wide variety of art ownership cases in New York.

A London-based art dealer asked the New York Court of Appeals on Monday to hear his claim to a pair of century-old drawings by Austrian artist Egon Schiele, arguing that lower state courts’ decisions would upend the New York art world if they were allowed to stand.

William Charron of Pryor Cashman, who is representing dealer Richard Nagy, argued that an earlier federal court case settled questions about rightful ownership of the drawings, which are part of a collection owned by a Jewish Austrian collector, Fritz Grunbaum, in the 1930s.

Grunbaum and his wife died in Nazi concentration camps during World War II, and their heirs sued Nagy in 2015, claiming ownership of the drawings.

The heirs’ lawyer, Raymond Dowd of Dunnington Bartholow & Miller, argued that Nazis stole Grunbaum’s art collection during the war.

But Charron argued that the question of the collection’s history was already settled by federal courts between 2005 and 2013, when Dowd and the heirs pursued the rights to another Schiele piece from the same collection. The federal ruling should apply to all the pieces in the collection, he wrote in Monday’s petition.

In the earlier case, Bakalar v. Vavra, the U.S. Court of Appeals for the Second Circuit found that the Nazis did not steal the drawing and that it was in the possession of Grunbaum’s sister-in-law in the 1950s, when she sold it to a gallery. Charron represented the man who had bought the drawing in that case, too.

Charron emphasized in Monday’s filing that the federal case involved “exhaustive international discovery,” arguing that the federal ruling should apply to all the pieces in the collection, since there was little reason to believe they’d been split up. The Nagy case in state court, in contrast, never went to trial, Charron wrote.

The Court of Appeals must review the lower state courts’ rulings, Charron wrote, because they created “novel rules” of collateral estoppel and laches that could affect a wide variety of art ownership cases in New York.

“The availability of the defenses of laches and collateral estoppel are critical to provide certainty to the New York marketplace, especially when dealing with collections of art and other property that may be sold in distinct parcels to multiple buyers,” Charron wrote. He added that the fate of the rest of the collection—50 more Schiele drawings—was also thrown into uncertainty when the state and federal courts reached different conclusions.

The doctrine of collateral estoppel should have barred the re-litigation of issues settled in federal court, Charron argued, while Nagy’s date of acquisition should have been irrelevant to his laches defense.

In response to a question about the appeal, Dowd said he is optimistic that the drawings will be auctioned at Christie’s in November.

 

https://www.law.com/newyorklawjournal/2020/02/11/high-court-urged-to-hear-nazi-art-theft-case-with-dealer-saying-ny-state-decisions-should-give-way/?slreturn=20200113025833
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