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United States: New York State Appellate Court Upholds Order for Return of Nazi-Looted Art

(Aug. 22, 2019) On July 9, 2019, the New York Appellate Division upheld a lower court’s decision ordering defendant Richard Nagy to return two pieces of art to the heirs of Fritz Grunbaum, a Jewish Viennese performance artist and art collector who was imprisoned and murdered by Nazis during the Holocaust. (Reif v. Nagy, No. 05504, slip op. (N.Y. App. Div. July 9, 2019.)

Background

Before World War II, Grunbaum owned a collection of 81 works of art by Egon Schiele, including two pieces named “Woman Hiding Her Face (1912)” and “Woman in a Black Pinafore (1911).” In 1938, shortly after the Nazi invasion of Austria, Grunbaum was captured and imprisoned by the Nazis. While imprisoned, the Nazis forced Grunbaum to execute a power of attorney over his property in favor of his wife, Elisabeth, who was still free at the time. Then, in accordance with the purported power of attorney, Elisabeth was forced to permit Nazi officers to inventory Grunbaum’s art collection and deposit it with a Nazi-controlled company. Grunbaum was murdered at Dachau concentration camp on June 9, 1941. In connection with obtaining her husband’s death certificate, Elisabeth filed a declaration stating that there was nothing remaining of her husband’s property. Elisabeth was subsequently evicted, forced into hiding, captured and, in 1942, murdered at Maly Trostinec extermination camp.

In the years following the war, pieces from Grunbaum’s plundered art collection resurfaced and were bought and sold by various dealers and collectors. Some of the owners were aware of the provenance of the Schiele works and took measures to hide or misrepresent the cloud on title. The defendant, an art dealer in London, acquired interests in the artworks in 2013, knowing that the heirs to Grunbaum’s estate had a potential claim to the artworks.

Underlying Decision

In 2016, the plaintiffs sued Nagy in New York, asserting their claim of superior title to the artworks (an action for replevin) and Nagy’s intentional interference with their right of possession of the artworks (an action for conversion). In 2018, on a summary judgment motion, the trial court determined that the plaintiffs had established a superior right to the artworks with evidence that they had belonged to Grunbaum and been looted by the Nazis. Nagy had not raised a triable issue of fact that Grunbaum had voluntarily transferred the pieces during his lifetime. Accordingly, the trial judge granted summary judgment to the plaintiffs and ordered Nagy to turn over the artworks to the plaintiffs. Nagy appealed that determination and order.

Present Decision

The appellate court affirmed the lower court’s grant of summary judgment. The plaintiffs had proffered sufficient evidence establishing that Grunbaum owned the artworks before World War II and that most of the dealers and purchasers of Grunbaum’s collection over the years were aware of his prior ownership. Additionally, the plaintiffs had submitted sufficient evidence that Grunbaum did not voluntarily relinquish his collection; rather, the Nazis arrested Grunbaum, tracked and confiscated his property, prevented him from exercising control over it, and forced him to sign a power of attorney under duress. Nagy had failed to raise an issue of fact sufficient to defeat summary judgment. Finally, the court rejected Nagy’s argument that the plaintiffs’ claims were barred by laches (unreasonable delay), citing Nagy’s recent acquisition of the artworks with awareness of the plaintiffs’ potential claim of ownership.