Opinion
No. 05 Civ. 3037 (WHP).
August 10, 2006
James A. Janowitz, Esq., William L. Charron, Esq., Suyin So, Esq., Pryor Cashman Sherman Flynn LLP, New York, NY, Counsel for Plaintiff and Counterclaim-Defendant David Bakalar.
Raymond J. Dowd, Esq., Dowd Marotta LLC, New York, NY, Counsel for Defendants and Counterclaim-Plaintiffs Milos Vavra and Leon Fischer.
Evan A. Davis, Esq., Cleary Gottlieb Steen Hamilton LLP, New York, NY, Counsel for Counterclaim-Defendant The Museum of Modern Art.
Howard N. Spiegler, Esq., Mari-Claudia Jimenez, Esq., Herrick, Feinstein LLP, New York, NY, Counsel for Counterclaim-Defendant Neue Galerie.
James R. Lynch, Esq., Lynch Daskal Emery LLP, New York, NY, Counsel for Counterclaim-Defendant Oberlin College and
Michael J. Frantz, Esq., Gregory R. Farkas, Esq., Brian E. Roof, Esq., Frantz Ward LLP, Cleveland, OH, Counsel for Counterclaim-Defendant Oberlin College.
John R. Cahill, Esq., Joshua D. Jacobson, Esq., Friedman Kaplan Seiler Adelman LLP, New York, NY, Counsel for Counterclaim-Defendant Sotheby's, Inc.
Kevin J. Burke, Esq., Cahill Gordon Reindel LLP, New York, NY, Counsel for Counterclaim-Defendant Schenker, Inc.
MEMORANDUM AND ORDER
Based on the equitable doctrine of laches, Plaintiff David Bakalar ("Bakalar" or "Plaintiff") moves for summary judgment dismissing Defendants Milos Vavra ("Vavra") and Leon Fischer's ("Fischer") (together, the "Heirs" or "Defendants") counterclaims. For the following reasons, Plaintiff's motion is denied.
BACKGROUND
Bakalar commenced this action seeking a declaratory judgment that he is the rightful owner of a drawing by Austrian expressionist artist Egon Schiele ("Schiele") known as Seated Woman with Bent Left Leg (Torso) (the "Drawing"). (Plaintiff's Local Rule 56.1 Statement, dated Jan. 27, 2006 ("Pl. 56.1 Stmt.") ¶ 5.) The pertinent facts underlying this action are set forth in this Court's prior Memorandum and Order and are not repeated here. Bakalar v. Vavra, No. 05 Civ. 3037, 2006 WL 2089884 (S.D.N.Y. July 28, 2006). In their counterclaims, Fischer and Vavra contend that they are the legal heirs of Fritz Grunbaum ("Grunbaum") as decreed by an Austrian court in 2002. Based on that order, they assert ownership of the Drawing. (Defendants' Local Rule 56.1 Objections and Counterstatement, dated Feb. 27, 2006 ("Defs. 56.1 Counterstmt.") ¶ 81.) Fischer is the grandson of Grunbaum's brother in-law, Max Herzl and Vavra is the grandson of Grunbaum's sister, Elise Zouzouli. (Pl. 56.1 Stmt. ¶¶ 16, 18; Defs. 56.1 Counterstmt. ¶¶ 16, 18.)
I. The Drawing
Prior to World War II, Grunbaum owned an extensive art collection, including many works by Schiele. (Pl. 56.1 Stmt. ¶¶ 6-7; Defs. 56.1 Counterstmt. ¶¶ 6-7.) As noted in this Court's earlier Memorandum and Order, Dr. Franz Kieslinger, an alleged agent of the Nazis, inventoried the Grunbaum art collection in July 1938 and identified more than 450 individual works (the "Kieslinger Inventory"). (Declaration of William L. Charron, dated Jan. 27, 2006 ("Charron Decl.") Ex. 7: Kieslinger Inventory.) Following Kieslinger's inventory, approximately 420 Grunbaum works were deposited with a storage company, Schenker Co. A.G. ("Schenker"). (First Amended Counterclaims and Answer, dated Feb. 6, 2006 ("Answer") Ex. C: Schenker Co. Request for Export Permit, dated Sept. 8, 1938). The Drawing is not identified by title in the Kieslinger Inventory nor in any Schenker documents submitted to this Court. (Charron Decl. Ex. 7.)
On November 12, 1963, Bakalar acquired the Drawing for $3,300 from the Galerie St. Etienne in New York. (Declaration of Jane Kallir, dated Mar. 23, 2006 ¶ 4.) According to the records of Defendants' genealogist, the Galerie St. Etienne purchased the Drawing from Eberhard Kornfeld ("Kornfeld") of the Gutekunst Klipstein gallery in Bern, Switzerland on September 18, 1956. (Declaration of Herbert Gruber, dated Jan. 5, 2006 ("Gruber Decl.") Ex. E at 77: Information Collected by Gruber on Drawing.) The particulars concerning how and when the Drawing came into Kornfeld's possession are in dispute.
Kornfeld contends that he purchased the Drawing among other works from Mathilde Lukacs ("Lukacs"), Grunbaum's sister in-law, who resided in Brussels after World War II. (Declaration of Patrick Legant, dated Jan. 25, 2006 ("Legant Decl.") ¶ 2 Ex. A: Email from Galerie Kornfeld, dated Feb. 14, 2005.) Lukacs considered those works (including the Drawing) "her personal property" and never mentioned any connection with Grunbaum. (Legant Decl. Ex. A: Facsimile from Galerie Kornfeld, dated Feb. 19, 2005.) Kornfeld maintains he did not learn that the works he purchased from Lukacs may have been part of Grunbaum's collection until 1998. (Declaration of Raymond J. Dowd, dated Feb. 27, 2006 ("Dowd Decl.") Ex. N: Letter from Kornfeld to Gruber, dated Feb. 7, 2006.) At that time, the Reif family contacted Kornfeld in connection with their search for Grunbaum assets. Back in 1963, Paul and Francis Reif (the "Reifs") received a certificate of inheritance for the Grunbaum estate from a German court. That certificate was revoked on March 19, 1998. (Defs. 56.1 Counterstmt. ¶¶ 57, 59.)
While Defendants rely on Kornfeld's account to link the Drawing to Grunbaum's collection, they contend that "Kornfeld has never been clear about what works [Lukacs] allegedly sold to him." (Gruber Decl. ¶ 35.) Defendants also attempt to discredit Kornfeld's version of events with an inconclusive report by their handwriting expert. (Gruber Decl. Ex. F: Report of Christian Farthofer.)
II. The Heirs
Fischer is a stamp dealer who has resided in New York for the past twenty-five years. (Deposition of Leon Fischer on Jan. 17, 2006 ("Fischer Dep.") at 4, 6.) His parents fled Belgium in 1940 following the Nazi invasion. (Fischer Dep. at 25.) Fischer's parents did not file any claims for reparations after World War II. (Fischer Dep. at 25.) He contends that he first heard the name Grunbaum in the late 1990's when he met with Dennis Langel, a genealogist. (Fischer Dep. at 63-7.) At that time, Langel informed Fischer that he appeared to be an heir of Elisabeth Grunbaum and that the Grunbaum family had assets prior to the annexation of Austria in or about March 1938. (Fischer Dep. at 67-8.) While Fischer never heard of the Grunbaums, he remembers discussions about Lukacs and specifically, that his mother and his grandmother corresponded with her. (Fischer Dep. at 39.) He maintains that his family never discussed Lukacs' art collection. (Fischer Dep. at 58.)
Vavra lives in the Czech Republic. (Charron Decl. ¶ 36.) He has not been deposed in this action because of poor health. (Charron Decl. ¶ 36.) While Vavra provides no sworn statement on this motion, his brother, Ivan Vavra, who is neither a declared Grunbaum heir nor a party to this action, claims that the Vavra family knew that Fritz Grunbaum was a wealthy man who loved to collect art. (Declaration of Ivan Vavra, dated Feb. 24, 2006 ("Vavra Decl.") ¶ 5.) Ivan Vavra also contends that Vavra's grandmother, who was Grunbaum's sister, "made inquiries to try and find out what happened to [Grunbaum's] property, but ran only into dead ends." (Vavra Decl. ¶ 7.)
DISCUSSION
I. Summary Judgment StandardSummary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). On such a motion, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Liberty Lobby, 477 U.S. at 255; accord Preseault v. City of Burlington, 412 F.3d 96, 101 (2d Cir. 2005). Summary judgment is not appropriate, however, where the non-movant can "set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Because laches warrants a fact-intensive inquiry, it is "often not amenable to resolution on a motion for summary judgment." U.S. v. Portrait of Wally, A Painting by Egon Schiele, No. 99 Civ. 9940 (MBM), 2002 WL 553532, at *22 (S.D.N.Y. Apr. 12, 2002). "In many cases, the application of the laches defense is an issue for trial." The Greek Orthodox Patriarchate of Jerusalem v. Christie's, Inc., No. 98 Civ. 7664 (KMW), 1999 WL 673347, at *10 (S.D.N.Y. Aug. 30, 1999).
II. Laches
Laches is "an equitable defense based on the maximvigilantibus non dormientibus aequitas subvenit (equity aids the vigilant, not those who sleep on their rights)." Ivani Contracting Corp. v. City of New York, 103 F.3d 257, 259 (2d Cir. 1997); accord Ikelionwu v. U.S., 150 F.3d 233, 237 (2d Cir. 1998). The defense operates to bar equitable claims when a party's unreasonable and inexcusable delay results in prejudice to his adversary. Brennan v. Nassau County, 352 F.3d 60, 64 (2d Cir. 2003);Ikelionwu, 150 F.3d at 237; Ivani Contracting Corp., 103 F.3d at 259; Saratoga County Chamber of Commerce, Inc. v. Pataki, 100 N.Y.2d 801, 816, N.Y.S.2d 654, 662 (2003). It is well-settled in New York that "[t]he mere lapse of time, without a showing of prejudice, will not sustain a defense of laches." Saratoga, 100 N.Y.2d at 816, N.Y.S.2d at 662; accord Hufnagel v. Martin, 23 A.D.3d 186, 189, 803 N.Y.S.2d 534, 537 (1st Dep't 2005). To establish this defense, Bakalar must demonstrate: (1) the Heirs knew of the their claim; (2) they delayed in taking action without excuse; and (3) Bakalar suffered prejudice as a result.Brennan, 352 F.3d at 64; Ikelionwu, 150 F.3d at 237; Juicy ZCouture, Inc. v. L'Oreal USA, Inc., No. 04 Civ. 7203 (DLC), 2006 WL 1012939, at *33 (S.D.N.Y. Apr. 19, 2006).
Bakalar contends that dismissal of the counterclaims is appropriate because the Heirs waited too long to bring them and evidence has disappeared. Drawing all inferences in the Heirs' favor, this Court cannot conclude that there are no genuine issues of material fact regarding the laches defense.
Bakalar's defense turns on when the Heirs acquired knowledge of their consanguinity to Grunbaum and whether they exercised reasonable diligence thereafter in locating the Drawing. See Solomon R. Guggenheim Found. v. Lubell, 77 N.Y.2d 311, 321, 567 N.Y.S.2d 623, 628 (1991) (reasonable diligence applies to laches defense); see also Sanchez v. Trs. Of the Univ. of Pa., No. 04 Civ. 1253 (JSR), 2005 WL 94847, at *2 (S.D.N.Y. Jan. 18, 2004); Greek Orthodox, 1999 WL 673347, at *7. In adjudicating disputes over artwork, the reasonable diligence inquiry focuses not only on efforts by the party to the action, but also on efforts by the party's family. See Sanchez, 2005 WL 94847, at *2-3 (considering lack of effort made by plaintiffs' father and grandfather); Wertheimer v. Cirker's Hayes Storage Warehouse, Inc., 300 A.D.2d 117, 118, 752 N.Y.S.2d 295, 297 (1st Dep't 2002) (noting absence of inquiries by family over time).
Fischer and Vavra were declared Grunbaum heirs in 2002. While Fischer was not familiar with the Grunbaum name until Langel approached him, he asserts that his family enjoyed a good relationship with Lukacs, who allegedly sold the Drawing to Kornfeld. (Fischer Dep. at 39, 63-7.) Therefore, there are issues of fact concerning what Fischer's family knew about the Grunbaum estate and the steps taken, if any, to reclaim assets. Vavra has not been deposed in this proceeding nor has he provided any sworn statement. And, the declaration by his brother is not admissible to establish what Milos Vavra knew. Fed.R.Evid. 602. While there is a dearth of evidence concerning Vavra's personal knowledge, the assertions by his brother that their grandmother pursued Grunbaum property raise questions that cannot be answered on this record. Thus, this Court cannot determine the length of the delay and whether that delay was excusable.
Summary judgment is also inappropriate because there are issues of fact concerning the prejudice to Bakalar. Obviously, in the sixty-eight years since the Kieslinger Inventory, witnesses have passed, memories have faded and documents have disappeared. See Sanchez, 2005 WL 94847, at *3; Greek Orthodox, 1999 WL 673347, at *10. However, Kornfeld, a pivotal witness, resides in Switzerland and has cooperated in providing several relevant documents to the parties concerning his relationship with Lukacs and the Drawing. See Greek Orthodox, 1999 WL 673347, at *10. Further, merits discovery is not complete. Under these circumstances, this Court cannot determine whether Bakalar has been prejudiced. See, e.g., Republic of Turk. v. The Metro. Museum of Art, 762 F. Supp. 44, 47 (S.D.N.Y. 1990) (summary judgment inappropriate "where there are genuine issues of material fact as to whether defendant was prejudiced by the alleged delay"); Lubell, 77 N.Y.2d 311, 321, 567 N.Y.S.2d 623, 628 (denying summary judgment based on laches against museum "because it is impossible to conclude from the facts of this case that the museum's conduct was unreasonable as a matter of law").
Accordingly, this Court concludes that issues of fact and interstices in the record preclude summary judgment on Bakalar's laches defense. See Brennan, 352 F.3d at 64 (laches cannot be determined where further factual development of the record is required); Guardian Music Corp. v. James W. Guercio Enter., No. 03 Civ. 9687 (SAS), 2006 WL 1880381, at *6 (S.D.N.Y. July 7, 2006) (genuine issue of material fact precludes summary judgment on laches defense).
CONCLUSION
For the foregoing reasons, Plaintiff David Bakalar's motion for summary judgment dismissing Defendants' counterclaims on the grounds of laches is denied.
SO ORDERED.