NEW YORK, Oct. 11, 2012 /PRNewswire/ -- The Second Circuit
Court of Appeals has affirmed today in its entirety a judgment that
Pryor Cashman obtained for its
client in a significant and long-running art law dispute.
The case, Bakalar v. Vavra, has been litigated for over
seven years and involves the question of who owns a drawing by the
artist Egon Schiele, known as Seated
Woman With Bent Left Leg (Torso). The ownership dispute was between
Pryor Cashman client David Bakalar, who purchased the drawing in the
early 1960's from a gallery in Manhattan, and heirs to the alleged former
owner of the drawing, a Viennese cabaret singer named Fritz Grunbaum who was murdered by the Nazis in
1941.
Grunbaum was a known collector of Egon
Schiele works. The heirs to Fritz
Grunbaum alleged that the drawing had been stolen by the
Nazis after Grunbaum's arrest in Vienna in 1938. However, while there was no
direct evidence that Grunbaum had ever actually owned the drawing
or that the drawing had ever been confiscated by the Nazis or their
agents, there was compelling evidence that the drawing had been
sold by Grunbaum's sister-in-law, a woman named Mathilde Lukacs, in Switzerland in 1956. Pryor Cashman obtained this evidence through
international Hague Convention discovery procedures from the Swiss
art dealer who had purchased the drawing from Lukacs, and who
produced all of his records from that time period and also
testified in the case.
Relying on that important piece of evidence, Judge Pauley of the
U.S. District Court for the Southern District of New York found as a matter of inference that
Grunbaum more likely than not did once own the drawing, but also
agreed with Pryor Cashman's argument
that the drawing had not been stolen by the Nazis and had instead
remained with the family. Pryor
Cashman successfully argued that same point on appeal to the
U.S. Court of Appeals for the Second Circuit.
The ruling is particularly significant because Bakalar was
required to disprove Nazi theft under controlling
New York law, which strictly holds
that good faith purchasers of property (like Bakalar) can never
take good title if the property was once in the hands of a thief.
Such burden-shifting is rare in the
United States.
The Grunbaum heirs had alternatively alleged that if Lukacs did
possess the drawing after World War II, then she had stolen the
drawing from the Grunbaum estate. Here Pryor Cashman successfully argued under
New York's so-called "laches
defense" that the heirs and their predecessors, i.e., their
parents and grandparents who had more direct knowledge of the
situation and who knew Lukacs, had unreasonably delayed in pursuing
such a claim against Lukacs and had consequently allowed the
critical evidence to disappear, thereby unduly prejudicing
Bakalar's ability to disprove that Lukacs herself had been a
thief.
"The Court's ruling is significant in holding that the laches
defense, and the question of delay in gathering evidence, does not
reset with each successive generation," says James A. Janowitz, a senior partner in
Pryor Cashman's Litigation Group,
and counsel for Mr. Bakalar. "The duty to search and act in a
timely matter should rest with the first generation to lose the
property."
The Second Circuit's ruling regarding the laches defense is
particularly significant to New
York's prominent art market. While New York strictly favors the rights of
dispossessed former owners over the rights of good faith purchasers
of stolen property, the laches defense provides an important
measure of balance so that good faith purchasers may defend their
title against stale or frivolous claims, when there is very little
direct evidence concerning the situation.
"This ruling offers very important protection for good faith
buyers and sellers of art in New
York," adds William L.
Charron, also a partner in Pryor
Cashman's Litigation Group and co-counsel for Bakalar.
"The ruling should also be highly instructive for cases nationwide
where a laches defense is asserted."
To read a copy of the Second Circuit's October 11, 2012 decision, please click here. To
read a copy of the District Court's August
17, 2011 decision, please click here.
Pryor Cashman Litigation Group Partners James Janowitz and
William Charron and associate
Mona Simonian represented Bakalar
throughout the entire course of the litigation.
Pryor Cashman LLP (www.pryorcashman.com) is an independent
full-service law firm with over 120 attorneys in its main office at
7 Times Square in New York City
and an office in Los Angeles. With
broad and sophisticated transactional and litigation practices,
Pryor Cashman provides a wide range
of services to meet the varying legal needs of businesses and
individuals. The firm has well-established relationships with firms
throughout the U.S. and the rest of the world to serve its national
and international clients.
SOURCE Pryor Cashman LLP