Reif v. The Art Inst. of Chi.
| Docket Number | 23-cv-2443 (JGK) |
| Decision Date | 24 November 2023 |
| Parties | TIMOTHY REIF, ET AL., Plaintiffs, v. THE ART INSTITUTE OF CHICAGO, Defendant, AN ARTWORK, RUSSIAN PRISONER OF WAR (1916) BY THE ARTIST EGON SCHIELE, Defendant-in-Rem. |
| Court | U.S. District Court — Southern District of New York |
The plaintiffs Timothy Reif, David Fraenkel, and Milos Vavra -- the heirs of Franz Freidrich (“Fritz”) Grunbaum -brought this diversity action against the Art Institute of Chicago (“the defendant”). The plaintiffs assert claims for declaratory judgment, conversion, and replevin arising out of the alleged theft of Russian Prisoner of War (1916) created by Egon Schiele (“the Artwork”).[1]The Artwork was allegedly stolen from Grunbaum by the Nazi regime while Grunbaum was imprisoned in the Dachau Concentration Camp.
The plaintiffs originally filed this action in New York State Supreme Court, New York County, on December 14, 2022. Am Compl. ¶ 29, ECF No. 15. The action was removed to this Court based on diversity of citizenship jurisdiction on March 22 2023. ECF No. 1.[2] The plaintiffs filed an amended complaint on March 31, 2023. ECF No. 15. The defendant filed a motion to dismiss the amended complaint on June 8, 2023, arguing that the plaintiffs' claims were barred by the statute of limitations and laches. Def.'s Mot. to Dismiss, ECF No. 31. The plaintiffs filed a cross-motion for summary judgment on June 29, 2023. ECF No. 35.
For the reasons set forth below, the defendant's motion to dismiss the amended complaint is granted, and the plaintiffs' cross-motion for summary judgment is denied without prejudice.
I.
Unless otherwise indicated, the following facts are taken from the amended complaint and are accepted as true for purposes of deciding the defendant's motion to dismiss.
Fritz Grunbaum was a Jewish Viennese cabaret performer, Am. Compl. ¶ 11, who had a collection of works by Austrian expressionist artist Egon Schiele, id. ¶ 71. The plaintiffs, Grunbaum's heirs, allege that Grunbaum involuntarily lost his collection prior to his death. Id. ¶ 41. Grunbaum was arrested by the Gestapo on March 22, 1938, and imprisoned in the Dachau Concentration Camp. Id. ¶ 11. On April 27, 1938, the Nazi regime passed a law requiring Jews with property valued over 5,000 Reichsmarks to declare and forfeit their property to the regime. Id. ¶ 32. On July 16, 1938, in the Dachau Concentration Camp, Nazis allegedly forced Grunbaum under duress to sign a power of attorney permitting his wife Elisabeth to liquidate his assets and hand the proceeds over to the regime. Id. ¶ 34. As a result, from 1938 to 1939, Elisabeth was forced to liquidate Grunbaum's assets. Id. ¶ 36. Among these assets were eighty-one works by Schiele, which were inventoried by a Nazi-controlled auction house that sold art seized from Jews. Id. ¶¶ 68-69, 71. Grunbaum was murdered in Dachau on January 14, 1941. Id. ¶ 11. On Grunbaum's death, both Elisabeth and a Vienna notary certified that Grunbaum had no property. Id. ¶ 37. On October 5, 1942, Elisabeth was deported to the Maly Trostinec death camp in Minsk, where she was murdered. Id. ¶ 38. Fritz and Elisabeth Grunbaum had separate property under Austrian law, and Elisabeth's June 1939 Jewish Property Declaration shows that all her property had been taken by the Nazi regime before she was murdered. Id. ¶¶ 39-40.
The plaintiffs allege that, in 1999, Leon Fischer and Milos Vavra first learned that Grunbaum's art collection survived World War II, when District Attorney Robert Morgenthau seized Grunbaum's Dead City III by Schiele at the Museum of Modern Art in New York City. Id. ¶ 47. Upon learning of the existence of Grunbaum's art collection, Fischer and Vavra began to pursue it. Id. ¶ 50. In 2002, Fischer and Vavra were each declared an heir of Fritz Grunbaum's estate entitled to an undivided, fifty-percent (50%) share, pursuant to a Certificate of Heirship issued by the District Court Innere Stadt Vienna. Id. ¶ 46.
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In 2005, Fischer and Vavra were sued by David Bakalar, who sought to extinguish their rights in Seated Woman with Bent Left Leg (Torso), a Schiele drawing that Bakalar purchased in 1964. Id. ¶¶ 92-93, 106. After a bench trial, a court in this District applying Swiss law initially awarded judgment to Bakalar. Bakalar v Vavra, No. 05-cv-3037, 2008 WL 4067335 (S.D.N.Y. Sept 2, 2008). The Court of Appeals for the Second Circuit vacated the judgment and remanded, holding that New York law, rather than Swiss law, should be applied. Bakalar v. Vavra, 619 F.3d 136 (2d Cir. 2010). On remand, the district court found that “Bakalar c[ould] not establish by a preponderance of the evidence that Grunbaum voluntarily relinquished possession of the [d]rawing, or that he did so intending to pass title.”[3]Bakalar v. Vavra, 819 F.Supp.2d 293, 300 (S.D.N.Y. 2011). The court also found that Bakalar did not satisfy his burden of proving that Mathilde Lukacs -- Grunbaum's sister-in-law who sold the drawing to Gallery Gutekunst & Klipstein in 1956 -acquired valid title in the drawing. See id. at 295, 299-302. However, the court held that Fischer and Vavra's “claims against Bakalar [we]re barred by laches” because they or their ancestors knew or should have known about a potential claim, and Bakalar was prejudiced by their delay. Id. at 304-07. The Court of Appeals for the Second Circuit affirmed the judgment in favor of Bakalar, holding that “there [wa]s no clear error in the findings that Vavra and Fischer's ancestors knew or should have known of a potential claim to the [d]rawing, that they took no action in pursuing it, and that Bakalar was prejudiced in this litigation as a result of that delay.” Bakalar v. Vavra, 500 Fed.Appx. 6, 9 (2d Cir. 2012).
On January 24, 2006, as part of the Bakalar litigation, Fischer and Vavra made a demand on the Art Institute of Chicago, the defendant in this case, to return Russian Prisoner of War, the Artwork at issue in this case. Lonergan Decl., Ex. C, ECF No. 32-3; Oral Arg. Tr. at 29:18-21, ECF No. 72 (“Tr.”). This was because the Artwork in this case and the work in Bakalar were both part of a common collection -- Grunbaum's Schieles sold by Mathilde Lukacs to Gallery Gutekunst & Klipstein in 1956 -- before they were eventually sold to Bakalar and the defendant in this case in the 1960s. Bakalar, 819 F.Supp.2d at 295; Am. Compl. ¶¶ 23, 87, 102, 155, 162. On February 3, 2006, the defendant declined to return the Artwork. Lonergan Decl., Ex. D, ECF No. 32-4.
In February 2012, Fischer appointed Reif and Fraenkel as executors of his estate in a last will and testament. Am. Compl. ¶ 48. Fischer created the Leon Fischer Trust for the Life and Work of Fritz Grunbaum, id. ¶ 52, of which Reif and Fraenkel are co-trustees, id. ¶ 53. Fischer died in August 2013. Id. ¶ 49.
In November 2015, Reif, Fraenkel, and Vavra filed an action in New York State Supreme Court, New York County, against London art dealer Richard Nagy and Richard Nagy Ltd. for two other Schiele works, titled Woman Hiding Her Face and Woman in Black Pinafore. Id. ¶ 124. Although the two works in Nagy were part of the same collection of Grunbaum's Schieles that included the work at issue in Bakalar and the Artwork at issue in this case, Reif v. Nagy, 80 N.Y.S.3d 629, 631 (Sup. Ct. 2018); Am. Compl. ¶¶ 23, 87, 102, the Nagy defendants purchased the two Schiele works in December 2013, Nagy, 80 N.Y.S.3d at 631. The New York State Supreme Court granted summary judgment to the plaintiffs on the plaintiffs' replevin and conversion claims, holding that the defendants' “statute of limitations and laches defenses fail[ed].” Id. at 635. The Appellate Division affirmed, holding that the Nagy defendants, having acquired the works at issue in 2013, “suffered no change in position[,] [n]or was any evidence lost between defendants' acquisition and plaintiffs' demand for the return of the [a]rtworks.” Reif v. Nagy, 106 N.Y.S.3d 5, 22 (App. Div. 2019). In fact, “Nagy was on notice of plaintiffs' claims to the Grunbaum collection prior to the purchase, as he filed a brief in the Bakalar action[,] . . . purchased the [a]rtworks at a substantial discount from the price sought by Sotheby's prior to the claim being publicized, and . . . obtained insurance for the very purpose of insuring title against plaintiffs' claims.” Id. at 22-23.
II.
The defendant moves to dismiss the plaintiffs' claims pursuant to Federal Rule of Civil Procedure 12(b)(6).
In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim, the Court must accept the allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). The Court's function on a motion to dismiss is “not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). To survive a motion to dismiss, the plaintiff's complaint “must contain sufficient factual matter, accepted as true, to state a claim for relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. While the Court should construe the factual allegations in the light most favorable to the plaintiff, “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Id.
When presented with a motion to dismiss, the Court may consider documents attached to or referenced in the complaint,...
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