38 F.3d 1266 (2nd Cir. 1994), 83127, DeWeerth v. Baldinger

Docket Nº:83127
Citation:38 F.3d 1266
Party Name:DeWeerth v. Baldinger
Case Date:May 16, 1994
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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38 F.3d 1266 (2nd Cir. 1994)

Gerda Dorothea DeWEERTH, Plaintiff-Appellee,

v.

Edith Marks BALDINGER, Defendant-Third-Party-Plaintiff-Appellant,

Wildenstein & Co., Inc., Third-Party-Defendant-Appellant.

Nos. 83,127, Docket 93-7144, 93-7146.

United States Court of Appeals, Second Circuit

May 16, 1994

Argued Nov. 15, 1993.

Amended Opinion Filed After Petition

for Rehearing Oct. 27, 1994.

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[Copyrighted Material Omitted]

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Joseph D. Becker, Becker, Glynn, Melamed & Muffly, New York City (John R. Horan, Fox & Horan, of counsel), for plaintiff-appellee.

Leslie Gordon Fagen, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, for defendant-third-party-plaintiff-appellant.

Jeremy G. Epstein, Shearman & Sterling, New York City, for third-party-defendant-appellant.

Before: ALTIMARI and WALKER, Circuit Judges, and OWEN, District Judge. [*]

WALKER, Circuit Judge:

This appeal is the latest episode in a decade-long dispute over the ownership of an oil painting entitled "Champs de Ble a Vetheuil" by Claude Monet. The work by the celebrated French Impressionist was previously owned by plaintiff Gerda Dorothea DeWeerth, a German citizen. It was discovered missing from DeWeerth's family castle after

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World War II, and was subsequently purchased by defendant Edith Marks Baldinger, a New York resident, from third-party-defendant Wildenstein & Co., a New York art gallery. Baldinger and Wildenstein & Co. (referred to collectively as "defendants") appeal from a judgment entered in the United States District Court for the Southern District of New York (Vincent L. Broderick, Judge ) that granted DeWeerth's motion pursuant to Fed.R.Civ.P. 60(b) for relief from the final judgment entered in favor of defendants in accordance with our decision in DeWeerth v. Baldinger, 836 F.2d 103 (2d Cir.1987), cert. denied, 486 U.S. 1056, 108 S.Ct. 2823, 100 L.Ed.2d 924 (1988), and entered a new judgment in plaintiff's favor. Defendants contend that the district court was precluded from considering DeWeerth's motion by both jurisdictional principles and the doctrine of the law of the case; that the district court abused its discretion in ordering relief pursuant to Rule 60(b)(5) and (6); and that the district court wrongly entered judgment in favor of DeWeerth based on the erroneous conclusions that her claim was not barred by laches and that her right to possession of the painting was superior to Baldinger's. We conclude that the district court was not barred from considering DeWeerth's motion, but that it abused its discretion in ordering relief from the final judgment based on Rule 60(b).

BACKGROUND

The facts of this case were fully explicated in the district court's initial DeWeerth opinion, 658 F.Supp. 688 (S.D.N.Y.1987), and only a brief recitation of them will be provided here.

DeWeerth claims that her father purchased the Monet from a Berlin gallery in 1908 and that she inherited the painting after her father's death in 1922. She had the painting in her possession until 1943 when she transferred it to her sister's castle in southern Germany for safekeeping during World War II. DeWeerth's sister discovered that the painting was missing in 1945, after the departure of American soldiers who had been quartered in her home. The Monet resurfaced in 1956, at which time Wildenstein & Co. acquired it from a Swiss art dealer. Baldinger subsequently purchased the painting from Wildenstein in 1957 in undisputed good faith.

In 1982, DeWeerth discovered that Baldinger was in possession of the Monet and demanded its return. When Baldinger refused, DeWeerth promptly commenced a diversity action to recover it. Baldinger in turn brought a third-party action against Wildenstein & Co. which was subsequently severed pursuant to Fed.R.Civ.P. 42(b). In April 1987, after a bench trial, Judge Broderick found that DeWeerth had established a superior right to possession of the Monet and issued a ruling in her favor. 658 F.Supp. 688 (S.D.N.Y.1987). The district court specifically rejected Baldinger's two principal defenses of limitations and laches. The district court concluded that the three-year statute of limitations applicable to this action, see N.Y.Civ.Prac.L. & R. Sec. 214(3) (McKinney 1990), did not begin to run until Baldinger refused DeWeerth's demand for the painting. In answer to Baldinger's assertion of laches, the district court determined that DeWeerth had been reasonably diligent in the pursuit of the Monet after 1945 and that Baldinger had not been prejudiced by any delay in the demand for the painting's return. The district court ordered Baldinger to deliver the painting to DeWeerth.

In December 1987, another panel of this court reversed the district court's judgment on the ground that New York limitations law required a showing of reasonable diligence in locating stolen property and that DeWeerth had failed to make such a showing. 836 F.2d 103 (2d Cir.1987). We found it unnecessary to consider Baldinger's alternative arguments that DeWeerth was guilty of laches and that she had failed to prove superior title. On February 5, 1988, we denied DeWeerth's petition for a rehearing, and on February 19, 1988, our mandate directing that the judgment in favor of DeWeerth be reversed was filed in the district court. On June 13, 1988, the Supreme Court denied DeWeerth's petition for a writ of certiorari. 486 U.S. 1056, 108 S.Ct. 2823, 100 L.Ed.2d 924 (1988).

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On May 2, 1991, DeWeerth brought a motion before us to recall the prior mandate and vacate the judgment in light of Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311, 567 N.Y.S.2d 623, 569 N.E.2d 426 (1991), a decision by the New York Court of Appeals that held that the New York statute of limitations applicable to this action did not require a showing of reasonable diligence in locating stolen property. We denied the motion without opinion on May 17, 1991.

On September 27, 1991, DeWeerth moved in the district court for relief pursuant to Fed.R.Civ.P. 60(b)(5) and (6) on the same ground set forth in her motion to recall the mandate. By Memorandum Order dated October 16, 1992, Judge Broderick granted DeWeerth's motion and once again ordered Baldinger to surrender the Monet to DeWeerth. 804 F.Supp. 539 (S.D.N.Y.1992). Judgment was entered on February 2, 1993, and this appeal followed.

DISCUSSION

I. Was the District Court Precluded from Considering DeWeerth's Rule 60(b) Motion?

Defendants argue that the district court lacked jurisdiction to act upon DeWeerth's Rule 60(b) motion and, furthermore, that any ruling in DeWeerth's favor was precluded by the Second Circuit's denial of DeWeerth's motion for recall of its mandate. We reject both contentions.

A. Jurisdiction

Defendants contend that the district court improperly considered DeWeerth's Rule 60(b) motion because only the Second Circuit could alter or set aside its mandate. In taking jurisdiction over DeWeerth's post-judgment application, the district court properly relied on Standard Oil Co. v. United States, 429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976) (per curiam). In that case, the Supreme Court made clear that a party wishing to pursue a Rule 60(b) motion to reopen a case that had been reviewed on appeal was not required to obtain leave of the appellate court or a withdrawal of the appellate court's mandate before proceeding in the district court. The Court reasoned that the district judge would not be flouting the existing mandate by acting on the motion since the appellate decision related only "to the record and issues then before the court, and [did] not purport to deal with possible later events." 429 U.S. at 18, 97 S.Ct. at 32.

Defendants counter that our decision in Eutectic Corp. v. Metco, Inc., 597 F.2d 32 (2d Cir.1979) (per curiam), established the proposition that "where an appellant argues that the appellate court made a mistake, only the appellate court has jurisdiction to correct that mistake." Defs. Br. at 17-18. This statement mischaracterizes the holding in Eutectic, which decided only that a district court does not have jurisdiction to alter an appellate ruling where the appellate court has already considered and rejected the basis for the movant's Rule 60(b) motion. Eutectic did not discuss the rule established in Standard Oil that a district court may consider a Rule 60(b) motion when "later events" arise that were not previously considered by the appellate court. Despite Eutectic 's silence regarding Standard Oil, our court subsequently recognized the authority of Standard Oil in Fine v. Bellefonte Underwriters Insurance Co., 758 F.2d 50 (2d Cir.), cert. denied, 474 U.S. 826, 106 S.Ct. 86, 88 L.Ed.2d 70 (1985). There, we upheld the district court's refusal to consider a Rule 60(b) motion since a Standard Oil situation had not been presented. We stated:

Our previous ruling was the law of the case, and the district judge correctly found that it had no jurisdiction to review an appellate court's decision. Judge Sweet correctly noted that the appellants cite no material change of circumstances or newly discovered evidence so as to bring the matter under the aegis of Standard Oil Co. v. United States.

Id. at 52 (citations omitted); see also Seese v. Volkswagenwerk, A.G., 679 F.2d 336, 337 (3d Cir.1982) (per curiam) (Rule 60(b) movant did not fit within Standard Oil because basis for its motion was already considered by the court of appeals and the Supreme Court).

Based on DeWeerth's assertion that the Guggenheim decision constitutes a

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"change in circumstances" that was not considered by the appellate court, we conclude that, unless our post-Guggenheim refusal to recall the mandate constitutes a binding consideration of...

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