In the Matter of Riven Flamenbaum, Deceased. Vorderasiatisches Museum, Respondent, Hannah K. Flamenbaum, Appellant, Israel Flamenbaum, Respondent.BriefN.Y.October 15, 2013To Be Argued By: Steven R. Schlesinger, Esq. Time Requested: 30 Minutes Appellate Division, Second Department, Docket No. 2010-04400 Surrogate’s Court, Nassau County, Clerk’s Index No. 328146 Court of Appeals State of New York In the Matter of the Account of Proceedings of Hannah K. Flamenbaum, as Executor of the Estate of RIVEN FLAMENBAUM, Deceased. And the Application of Vorderasiatisches Museum for a Determination of the Validity and Enforceability of a Verified Claim. __________________________________ VORDERASIATISCHES MUSEUM, Respondent, -against- HANNAH K. FLAMENBAUM, Appellant, -and- ISRAEL FLAMENBAUM, Respondent. APPELLANT’S REPLY BRIEF Date Completed: September 18, 2013 JASPAN SCHLESINGER LLP Attorneys for Appellant Hannah K. Flamenbaum 300 Garden City Plaza, 5th Floor Garden City, New York 11530 (516) 746-8000 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES ................................................................................iii PRELIMINARY STATEMENT ............................................................................1 ERRORS IN THE MUSEUM’S COUNTERSTATEMENT OF “FACTS” ....................................................5 MISSTATEMENTS IN THE MUSEUM’S PRESENTATION OF THE PROCEDURAL HISTORY .........................................................................6 ARGUMENT ........................................................................................................13 POINT I ANY CLAIM THE MUSEUM MAY HAVE TO THE TABLET IS BARRED BY THE DOCTRINE OF LACHES...............................................................13 A. The Museum’s Lack of Due Diligence was Unreasonable ................................................16 B. The Museum’s Lack of Due Diligence Has Caused Substantial Prejudice to the Estate ..........................................................24 POINT II THE SURROGATE ERRED IN DETERMINING THAT THE MUSEUM HAD TITLE TO THE TABLET......................................................31 ii POINT III THE REMAINDER OF THE ARGUMENTS THE MUSEUM RAISES FOR THE FIRST TIME ON APPEAL ARE WITHOUT MERIT...............................37 A. The Application of Laches is Permissible and is not Preempted by Either the 1970 UNESCO Treaty or the 1954 Hague Convention Because Neither Were in Effect at the Time the Tablet was Taken ............................................37 B. The Museum is Not Entitled to Rely on Federal Law Designed to Protect Foreign Sovereigns ..................................................42 1. The Act of State Doctrine is Inapposite ...................44 2. The Foreign Sovereign Immunities Act is Inapposite.......................................................49 CONCLUSION.....................................................................................................50 iii TABLE OF AUTHORITIES Page(s) FEDERAL CASES Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964)..................................................................................... 44, 46 DeWeerth v. Baldinger, 836 F.2d 103 (2d Cir. 1987)................................................................................20 Dubied Mach. Co. v. Vermont Knitting Co., Inc., 739 F. Supp. 867 (S.D.N.Y. 1990) .............................................................. 32, 33 Greek Orthodox Patriarchate of Jerusalem v. Christie’s Inc., No. 98 Civ. 7664(KMW), 1999 U.S. Dist. LEXIS 13257, 1999 WL 673347 (S.D.N.Y. Aug. 18, 1999)......................................... 16, 18, 19 Kunstsammlungen Zu Weimar v. Elicofon, 678 F.2d 1150 (2d Cir. 1982)............................................................... 5, 6, 22, 23 Oetjen v. Central Leather Co., 246 U.S. 297 (1918)............................................................................................45 Republic of Iraq v. ABB AG, No. 08 Civ. 5951 (SHS), 2013 U.S. Dist. LEXIS 16154 (S.D.N.Y. Feb. 6, 2013) .................................................................... 45, 46, 47, 48 Republic of Iraq v. First Nat. City Trust Co., 207 F. Supp. 588 (S.D.N.Y. 1962) .....................................................................49 Republic of Philippines v. Marcos, 806 F.2d 344 (2d Cir. 1986)......................................................................... 46, 47 Saudi Arabia v. Nelson, 507 U.S. 349 (1993)............................................................................................48 iv Page(s) Shiotani v. Walters, No. 10 Civ. 1375(RJS), 2012 U.S. Dist. LEXIS 175464, 2012 WL 6621279 (S.D.N.Y. Dec. 3, 2012) .............................................. passim Tismo v. M/V Ippolytos, 776 F. Supp. 928 (D.N.J. 1991) ..........................................................................48 Underhill v. Hernandez, 168 U.S. 250 (1897)............................................................................................44 U.S. v. Portrait of Wally, 663 F. Supp. 2d 232 (2009) ......................................................................... 44, 45 W.S. Kirkpatrick & Co. Inc. v. Envtl. Tectonics Corp., Int’l, 493 U.S. 400 (1990)............................................................................................45 STATE CASES Bingham v. New York City Transit Auth., 99 N.Y.2d 355 (2003) .................................................................................. 12, 37 Glenesk v. Guidance Realty Corp., 36 A.D.2d 852, 321 N.Y.S.2d 685 (2d Dep’t 1971).................................... 15, 25 In re Estate of Sbuttoni, 16 A.D.3d 693, 792 N.Y.S.2d 187 (2d Dep’t 2005).................................... 12, 37 Menzel v. List, 22 A.D.2d 647, 253 N.Y.S.2d 43 (1964) ............................................................30 Metro. Museum Historic Dist. Coal. v. De Montebello, 3 Misc. 3d 1109(A), 787 N.Y.S.2d 679 (Sup. Ct., N.Y. Cty. 2004) ........... 42, 43 Perez v. Chase Manhattan Bank, 61 N.Y.2d 460, 469 (1984) .................................................................................44 v Page(s) Peters v. Sotheby’s Inc., 34 A.D.3d 29, 821 N.Y.S.2d 61 (1st Dep’t 2006) ....................................... 15, 29 Solomon R. Guggenheim Foundation v. Lubell (“Guggenheim I”), 153 A.D.2d 143, 550 N.Y.S.2d 618 (1st Dep’t 1990) .................................. 29, 30 Solomon R. Guggenheim Foundation v. Lubell (“Guggenheim II”), 77 N.Y.2d 311, 567 N.Y.S.2d 623 (1991) .................................................. passim Sporn v. MCA Records, 58 N.Y.2d 482 (1983) .........................................................................................29 Trenton Banking Co. v. Duncan, 86 N.Y. 221 (1881) .............................................................................................13 Upright v. Mercury Bus. Machines Co., 24 Misc. 2d 571, 203 N.Y.S.2d 288 (Sup. Ct., N.Y. Cty. 1960)........................43 Wertheimer v. Cirker’s Hayes Storage Warehouse, Inc., 300 A.D.2d 117, 752 N.Y.S.2d 295 (1st Dep’t 2002) ................................ passim FEDERAL STATUTES FOREIGN SOVERIGN IMMUNITIES ACT.................................................... 12, 42, 44, 49 STATE STATUTES CPLR 214.................................................................................................................29 S.C.P.A. § 1803..........................................................................................................7 S.C.P.A. § 1806(3) .....................................................................................................7 S.C.P.A. § 1808(4) .....................................................................................................7 vi Page(s) INTERNATIONAL TREATIES 1954 Hague Convention on the Protection of Cultural Property in the Event of Armed Conflict (“Hague Convention”) ....................................................... 37, 38, 41, 42 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Transport, Export, and Transfer of Ownership of Cultural Property (“UNESCO Treaty”) ............................... 37, 38, 39, 40, 41, 42 1 PRELIMINARY STATEMENT This reply brief is submitted on behalf of Appellant, Hannah K. Flamenbaum, the Executor of the Estate of Riven Flamenbaum (“Appellant”, “Executor” or “Estate”) in reply to the Brief for Respondent Vorderasiatisches Museum (“Museum’s Brief”) and in further support of its appeal from the Appellate Order, which erroneously and improperly reversed the Surrogate’s Order and granted the claim of the Museum for replevin of the Tablet,1 despite the fact that the Museum’s claim was barred by the doctrine of laches. As demonstrated herein and in the Brief for Appellant, previously submitted to this Court, any claim that the Museum may have had to the Tablet is barred by the doctrine of laches. Contrary to the Appellate Order, there is no requirement, in case law or otherwise, that a putative owner have “direct knowledge” of the location of missing artwork before undertaking a diligent search, and indeed neither the Museum nor the Second Department provide a citation for that proposition. If there were such a requirement, there would be no need to conduct a search or perform due diligence. 1 All capitalized terms shall have the same meaning as defined in the Brief for Appellant, previously submitted to this Court, unless otherwise indicated herein. 2 The Museum’s Brief does not dispute this, but merely confirms that, upon discovering the Tablet was missing, the Museum failed to take any steps to locate, investigate, or recover the Tablet, even such simple steps as listing it on any available registry of missing artwork, or contacting the New York dealer, or the New York City Police Department, Federal Bureau of Investigation or Interpol. The Museum then abandoned any claim it may have had by continuing to fail to take any efforts to locate the Tablet, for a period of more than 60 years, even though it had notice that the Tablet had been seen by a respected professor in the possession of a New York dealer. The Tablet was known by the Museum to be in the possession of a New York dealer in 1954. Thus, had the Museum’s replevin claim been brought earlier, the Decedent would have been alive to testify as to how the Tablet came to be in his possession. In addition, Professor Güterbock, the professor from the Oriental Institute of the University of Chicago, who reported seeing the Tablet in the possession of a New York dealer in 1954, has also passed away. The Museum’s delay, however, has also removed any opportunity for Professor Güterbock to testify. If their testimony had been available, a proper showing of a chain of possession or title may have been demonstrated by the New York dealer or the Decedent. The loss of this testimony is detrimental to the Estate’s ability to mount 3 a defense of good title. But for the Museum’s inexcusable and inordinate delay, defenses, such as superior title, could have been proven by the Decedent. The Museum fails to explain in its brief why it never reported the Tablet missing to appropriate authorities at any time, whether at the end of World War II when it discovered that the Tablet was missing; after the 1954 report from a former employee that the Tablet was seen in New York in the hands of a dealer; after the 1983 Grayson publication notifying the art world, and the Assyrian art community in particular, of the 1954 sighting by Professor Güterbock; after a notation of the sighting was made in its own business records; or after the fall of the Berlin Wall in 1989, or at any time thereafter. Opportunities to do so presented themselves over and over again for a period of 60 years, yet the Museum did nothing. The recent decision in Shiotani v. Walters, No. 10 Civ. 1375(RJS), 2012 U.S. Dist. LEXIS 175464, 2012 WL 6621279 (S.D.N.Y. Dec. 3, 2012), addressed a motion for summary judgment brought by defendants against plaintiff on his complaint for replevin of a valuable painting. The Court, in granting summary judgment for the defendants, explained and confirmed the elements required under New York law to support a laches defense, to wit; the claimant seeking the return of an item was, or should have been aware of the existence of a possible claim (i.e., the loss of the item was known or should have been known to the claimant); the claimant inexcusably delayed in taking any steps to search for the item over a 4 period of years; and the person in possession of the item was prejudiced as a result. Shiotani, 2012 U.S. Dist. LEXIS 175464, at *15. With respect to the element of inexcusable delay, the Court in Shiotani found that it had been met since (1) a substantial amount of time had elapsed between the disappearance of the painting and plaintiff’s commencement of the lawsuit (25 years) and (2) plaintiff was not diligent in searching for the painting. Id. at *17, 19. With respect to the element of prejudice to defendants, that Court found that defendants were prejudiced by plaintiff’s delay in commencing the lawsuit because certain witnesses and documents were no longer available to refute plaintiff’s claim. Id. at *20, 22. Similarly in the instant matter, the Estate has met all the elements required to support its laches defense. Today, rather than acknowledging its failures, the Museum attempts to hide behind a smokescreen of meritless and inapplicable claims based upon international legal doctrines that, in any event, it waived by failing to raise them at the hearing before the Surrogate. These doctrines, however, are nothing but an attempt to distract from the simple and straightforward facts of this case, namely, that the Museum inordinately delayed in making any effort whatsoever to pursue its missing property, delayed in bringing its claim, and waived these legal arguments. 5 ERRORS IN THE MUSEUM’S COUNTERSTATEMENT OF “FACTS” In an ironic attempt to play the victim, the Museum, beginning at page 11 of Museum’s Brief, attempts to create a fiction by claiming that any “inquiries concerning [Soviet] confiscation [of the Tablet by the Russian Trophy Commission] were not possible.” The Museum’s reasoning is that “[u]ntil the collapse of the Berlin Wall in 1989 . . . the Museum’s contact with the West or with Western Colleagues was severely limited. Obtaining Western literature was practically impossible . . . .” (Museum’s Br. at 11-12.) This is a blatant misrepresentation of the facts that existed at the time. Significantly, as the Surrogate noted (R. at 16), the director of another East Germany Museum, the Weimar, was able to make the very efforts the Museum claims were impossible, including contacting the authorities of the Russian Soviet government and Western authorities: Dr. Scheidig, the Director of the Weimar Museum from 1940 to 1967, who discovered the theft [in 1945], immediately reported the theft and thereafter engaged in diligent efforts to locate the paintings. These efforts included contacting various German museums and administrative organs, the Allied Control Council, the Soviet Military Administration, the United States State Department, and the Fogg and Germanic museums at Harvard (which were active in locating stolen art), all to no avail. 6 Kunstsammlungen Zu Weimar v. Elicofon, 678 F.2d 1150, 1156 (2d Cir. 1982) (applying New York law). Thus, as a matter of law, any claim by the Museum that it could take no efforts as a result of the Cold War are patently frivolous. In the instant case, however, contrary to the holdings of this Court in Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311, 567 N.Y.S.2d 623 (1991) and the First Department’s decision in Wertheimer v. Cirker’s Hayes Storage Warehouse, Inc., 300 A.D.2d 117, 752 N.Y.S.2d 295 (1st Dep’t 2002), the Second Department’s analysis erroneously failed to give any weight to the Museum’s complete lack of due diligence. MISSTATEMENTS IN THE MUSEUM’S PRESENTATION OF THE PROCEDURAL HISTORY The Museum improperly and incorrectly claims that “[a]t no time prior to the hearing did the Museum receive notice through any pleading that the affirmative defense of laches would be asserted against it.” (Museum’s Br. at p. 15.) The Museum continues on its path of misrepresentation by (1) alleging that the “Surrogate specifically ruled at the onset of the hearing that any unpleaded defenses would not be entertained” and (2) arguing that the doctrine of laches was not pleaded and was barred by the Surrogate’s alleged ruling. Both assertions are not merely incorrect, but are fabrications. (Museum’s Br. at p. 15.) In fact, a full reading of the colloquy with the Surrogate at the inception of the hearing shows that (1) no ruling was made by the Surrogate as alleged by the 7 Museum and (2) the Museum was on notice that laches was being argued by the Estate long before the hearing and prior to the close of discovery. THE COURT: … You are raising an issue of the Statute of Limitations. The Statute of Limitation is an affirmative defense which if not raised in the pleading, in a responsive pleading on time, is waived. So I am saying to you, counsel, has it been raised in the pleadings? If not, it’s waived. MR. SCHLESINGER: Your Honor, I don’t believe there were any pleadings. (R. at 112-13.) Mr. Schlesinger was correct. The Museum presented its claim solely by the service and filing of its notice of claim and supporting affidavit pursuant to S.C.P.A. § 1803. The Executor rejected the Museum’s claim by allowing the 90-day period provided for in S.C.P.A. § 1806(3) to run. Ordinarily, pursuant to S.C.P.A. § 1808(4), where a claimant has properly filed objections to the accounting, the executor is then entitled to raise affirmative defenses in a reply to the objections which must be served within 5 days from the service of the objections. Incredibly, the records of the Surrogate’s Court show that the Museum never served and filed any objections to the Executor’s accounting. Since the Museum never filed objections, as was required of it, the time for the Estate to file a reply and assert affirmative defenses never began to run. Thus, Mr. Schlesinger’s statement that there were no pleadings was correct 8 and the time to plead affirmative defenses had not yet begun to run when the subject colloquy took place. The colloquy continues: THE COURT: There’s a claim. MR. FISHER:2 Your Honor, it was not raised. It was not raised. There have been a lot of pleadings in this case. It has never been raised. This is the first mention of it. (R. at 113.) Mr. Fisher’s remarks, like the Museum’s claim to this Court that “[a]t no time prior to the hearing did the Museum receive notice through any pleading that the affirmative defense of laches would be asserted against it”, is disingenuous for two reasons. First, as stated above, there were no pleadings. Second, this was not the first mention of the defense of laches. In fact, the laches defense had been raised far earlier in the litigation. Specifically, the Estate moved, by Order to Show Cause, to have the note of issue vacated so additional discovery could be completed with respect to a potential laches defense. (R. at 50-57.) In the affirmation of Wallace W. Leinheardt, Esq., dated February 19, 2008, submitted in support of the Estate’s order to show cause, the need for additional discovery was explained. Mr. Leinheardt had spent months in contact with the Art Loss Registry. He was seeking reports concerning whether the Museum, or any other entity, had 2 Trial counsel for the Museum. 9 ever reported the Tablet lost or stolen. Whether such reports were ever filed by the Claimant is especially relevant to the Claimant’s assertion of title to the Subject Artifact, and is even more crucial in proving that the Claimant should be barred from reclaiming the Subject Artifact pursuant to the laches doctrine. (R. at 57.) As can be seen from Mr. Leinheardt’s affirmation, contrary to Mr. Fisher’s erroneous assertion, the defense of laches was raised. The colloquy continues: THE COURT: Okay. MR. SCHLESINGER: My understanding is there was a notice of appearance and claim against the estate, and then - - THE COURT: If you don’t raise it, it’s waived. Go ahead, please. MR. SCHLESINGER: Either it would have commenced about 1945 and run for three years or it’s subject to a defense of laches. One of the issues in the defense of laches is if the museum had good title to this piece, that they had a duty to undertake to recover it by listing it with the International Registry of Missing Art and all of those types of diligence so that it would come to the attention of a dealer or anyone else shown the piece, and none of that was ever done, which creates a laches defense, that said 60 years in the future, where the decedent is no longer here to testify as to how he 10 acquired the piece, and we have no way of demonstrating how the acquisition happened which puts the estate in a very bad prejudicial way. They raised a claim by notifying the authorities and having it registered as it was appraised over the years. THE COURT: Just to interrupt you. We will have to deal with those issues that were raised and that you - - MR. SCHLESINGER: Yes. THE COURT: Is there anything else? MR. FISHER: No, your Honor. THE COURT: And we will deal with that. They are raising issues of a defense, which is, I guess, for the first time. We can deal with that from a legal standpoint. Mr. Reilly, do you wish to say anything. MR. REILLY:3 Thank you, your Honor, but no. THE COURT: Please call your first witness, Mr. Fisher. (R. at 113-15.) As is clear from this exchange, the Court made no ruling with regard to the defense of laches at the beginning of the hearing. Instead, the Surrogate specifically said “[w]e will have to deal with those issues that were 3 Counsel for Objectant-Respondent Israel Flamenbaum 11 raised [referring to laches]”, that “we will deal with that”, and we can “deal with that from a legal standpoint”. Further, and perhaps more importantly, the Surrogate specifically requested that the parties expressly address laches in their post-hearing memoranda of law and facts. MR. SCHLESINGER: The only thing left is to discuss a briefing schedule. THE COURT: There are numerous issues, Statue of Limitations, laches, the concept of title, and who had the burden of proof on these issues, and the aspect of spoils of war issues raised by Mr. Schlesinger. (R. at 185-86.) Significantly the post-hearing memoranda focus extensively on the defense of laches. The Museum’s own post-hearing memorandum has three pages specifically discussing the defense of laches (which makes no sense if the Museum thought the Surrogate had ruled the defense had been waived) (R. at 229-232), the Estate’s memorandum has sixteen pages (R. at 254-270), and Respondent Israel’s Flamenbaum’s memorandum has three pages. (R. at 275-78.) Each of the reply memoranda of law also focus on the laches defense, with seven pages (R. at 282- 290), three pages (R. at 312-16), and four pages (R. at 296-300), respectively. Of the more than 36 pages of post-hearing memoranda specifically focusing on laches, the Museum drafted 10 pages. (R. at 229-232; 282-290.) No place in those ten pages does the Museum set forth its belief that the Surrogate had already 12 ruled that the defense was waived or that it was surprised by the arguments pertaining to the defense. Indeed, if the Museum truly believed that the Surrogate’s Court had ruled the defense was waived, it would not have addressed laches in its initial post-hearing memorandum and it would have brought its belief that the Court had already ruled on the issue to the Surrogate’s attention in its reply memoranda. Yet, it addressed the defense in both memoranda and never mentioned that it was surprised or claimed the defense was barred by the law of the case doctrine, as it now seeks to argue before this Court. Finally, in a clear example of Monday-morning-quarterbacking, the Museum’s appellate counsel (who did not act as trial counsel) seeks to raise issues, for the first time on appeal that he wished the Museum’s trial counsel had raised during the hearing or in the post-hearing memoranda, which includes international treaties, the act of state doctrine, and the Foreign Sovereign Immunities Act. This is patently improper. See Bingham v. New York City Transit Auth., 99 N.Y.2d 355, 359 (2003); In re Estate of Sbuttoni, 16 A.D.3d 693, 694, 792 N.Y.S.2d 187, 188 (2d Dep’t 2005) (concluding appellant’s new arguments with respect to the statute of limitations were “improperly raised for the first time” on appeal). 13 ARGUMENT POINT I ANY CLAIM THE MUSEUM MAY HAVE TO THE TABLET IS BARRED BY THE DOCTRINE OF LACHES The Museum attempts to twist the law relevant to a laches defense to provide a test or balancing act more favorable to it. First, the Museum, relying on an inapposite 132 year-old real estate case,4 and ignoring the holdings of seminal cases by this Court specifically addressing laches, claims that for the laches doctrine to attach, the “party asserting laches must also demonstrate either actual fraud or conduct equivalent to a fraud causing reasonable reliance on a past owner’s inaction.” (Museum’s Br. at 36-37.) Significantly, the case relied upon by the Museum did not concern stolen art work, personal property, or laches. Instead, it concerned a more basic form of estoppel relevant to claims of sale and title to real property. Second, the Museum attempts to wrongfully shift its legal burden and the legal obligation requiring it to take reasonable steps to locate the Tablet, by selectively quoting from Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311, 567 N.Y.S.2d 623 (1991) (“Guggenheim II”). The Museum argues that the stand alone quote it provides in the Museum’s Brief at p. 37, which itself is taken 4 Trenton Banking Co. v. Duncan, 86 N.Y. 221 (1881). 14 out of context, supports the Museum’s proposition that in a laches analysis this Court has rejected shifting the burden of locating missing art to the true owner. (Museum’s Br. at 37.) In fact, the very passage quoted by the Museum speaks only to a statute of limitation defense, and not a laches defense. The passage quoted by the Museum is: To place the burden of locating stolen artwork on the true owner and to foreclose the rights of that owner to recover its property if the burden is not met would, we believe, encourage illicit trafficking in stolen art. Three years after the theft, any purchaser, good faith or not, would be able to hold onto stolen art work unless the true owner was able to establish that it had undertaken a reasonable search for the missing art. This shifting of the burden onto the wronged owner is inappropriate. In our opinion, the better rule gives the owner relatively greater protection and places the burden of investigating the provenance of a work of art on the potential purchaser. Guggenheim II, 77 N.Y.2d at 320. The Museum misrepresents the holding of the case by omitting any reference to the paragraph immediately following the quoted passage, which paragraph not only confirms that the quoted passage speaks only to the statute of limitations, and not laches, but specifically states that the rules for laches is quite different. Despite our conclusion that the imposition of a reasonable diligence requirement on the museum would be inappropriate for purposes of the Statute of Limitations, our holding today should not be seen as either sanctioning the museum’s conduct or suggesting that the museum’s conduct is no longer an issue in this case. We agree with the Appellate Division that the 15 arguments raised in the appellant’s summary judgment papers are directed at the conscience of the court and its ability to bring equitable considerations to bear in the ultimate disposition of the painting. As noted above, although appellant’s Statute of Limitations argument fails, her contention that the museum did not exercise reasonable diligence in locating the painting will be considered by the Trial Judge in the context of her laches defense. The conduct of both the appellant and the museum will be relevant to any consideration of this defense at the trial level, and as the Appellate Division noted, prejudice will also need to be shown (153 AD2d, at 149). Id. at 321. As this Court explained in Guggenheim II, laches is an equitable defense with two requirements: (1) the plaintiff has unreasonably delayed in filing suit, and (2) the defendant has suffered harm as a result of that delay. Id. With respect to the second element, harm may be demonstrated by showing an “injury, change of position, intervention of equities, loss of evidence, or other disadvantage resulting from such delay.” Glenesk v. Guidance Realty Corp., 36 A.D.2d 852, 853, 321 N.Y.S.2d 685 (2d Dep’t 1971) (abrogated on other issues) (citation omitted); see, e.g., Peters v. Sotheby’s Inc., 34 A.D.3d 29, 36, 821 N.Y.S.2d 61 (1st Dep’t 2006) (holding that the laches defense bars plaintiff’s replevin action); Wertheimer v. Cirker’s Hayes Storage Warehouse, Inc., 300 A.D.2d 117, 118, 752 N.Y.S.2d 295 (1st Dep’t 2002) (holding that laches bars plaintiff’s claim because plaintiff’s failure to exercise due diligence in seeking 16 return of a valuable painting left defendant virtually unable to prove that any of his predecessors in ownership had good title); Shiotani v. Walters, No. 10 Civ. 1375 (RJS), 2012 U.S. Dist. LEXIS 175464, at *22, 2012 WL 6621279 (S.D.N.Y. Dec. 3, 2012) (applying New York law) (“[T]he Court finds that the undisputed evidence establishes that Defendants were prejudiced by Plaintiffs delay in initiating this lawsuit because certain witnesses and documents are no longer available.”); Greek Orthodox Patriarchate of Jerusalem v. Christie’s Inc., No. 98 Civ. 7664(KMW), 1999 U.S. Dist. LEXIS 13257, at *23-24, 1999 WL 673347 (S.D.N.Y. Aug. 18, 1999) (applying French law, but stating in dicta that, had New York law applied, the laches defense would have barred recovery of an ancient scripture due to the owner’s failure to search for it or report it missing for decades). A. The Museum’s Lack of Due Diligence Was Unreasonable. In this case, the Museum’s delay and lack of due diligence are so extreme, and so detrimental to the ability of any party to properly show a chain of custody, much less legal title, that the application of the doctrine of laches is appropriate and the Museum’s claims should be barred with prejudice. The Museum misrepresents the standard for laches. The Museum states that “[t]he Appellate Division, having correctly determined that the Museum had no knowledge of the location of the Tablet prior to 2006” (which itself is incorrect) “proceeded to apply the correct legal standard [for laches]”. (Museum’s Br. at 36.) 17 This statement simply highlights the error the Appellate Division made, namely, focusing on an owner’s “direct” knowledge of the whereabouts of missing property, rather than focusing on what, if any, due diligence the owner undertook to locate the missing property. There is no requirement, in case law or otherwise, that a putative owner have “direct knowledge” of the location of missing artwork before undertaking a diligent search, and indeed neither the Museum nor the Second Department provide a citation for that proposition. If there were such a requirement, it would abrogate the need for any search at all since the purpose of the search is to gain direct knowledge. As such, to the extent the Second Department exercised its discretion, it did so based on a faulty legal foundation. Instead, under the framework of Guggenheim II, a museum is required to exercise a reasonable measure of due diligence while the property is missing to defeat a claim of laches that could come much later. See Guggenheim II, 77 N.Y.2d at 321 (“The conduct of both the appellant and the museum will be relevant to any consideration of this defense”). The effectiveness of any due diligence is not a relevant factor. Indeed, no court, other that the Second Department in this case, has refused to apply laches to bar a claim because that Court believed that, had the required due diligence been performed, it would have been ineffective. Rather, the focus must be on the question of whether the 18 Museum took any steps to locate the Tablet at all. Stated another way, a showing that due diligence may have failed does not vitiate the obligation of the Museum to perform that diligence in the first place. If the rightful owners of missing artwork could simply claim that due diligence would be futile, the search would be discouraged and the result would be no diligence at all. As discussed in greater detail in the Brief for Appellant, a similar case to the instant matter is Wertheimer v. Cirker’s Hayes Storage Warehouse, Inc., 300 A.D.2d 117, 752 N.Y.S.2d 295 (1st Dep’t 2002). In addressing the issue of diligence, the First Department stated that, The uncontradicted evidence establishes that, for nearly half a century prior to the commencement of this action in 2000, the Wertheimers failed to take any steps to recover the painting. In this regard, we note that the family did not make any inquiries, either directly or through an agent, based on a New York gallery’s advertisement of the painting for sale in a prominent art journal in 1951, notwithstanding that plaintiff’s grandfather then lived in New York. Significantly, the New York gallery did not sell the painting until 1954, and even after the sale the gallery could have identified the buyer to an inquirer, as it voluntarily did at de Sarthe’s request nearly 50 years later. Because the [rightful owner’s] lack of due diligence in seeking the return of the painting, as described above, substantially prejudiced [the current possessor] by making it virtually impossible for [the possessor] to prove that any of its predecessors in interest acquired 19 good title, the IAS court properly granted [the possessor’s] motion for summary judgment dismissing the complaint on grounds of laches (see Greek Orthodox Patriarchate of Jerusalem v Christie’s Inc., 1999 WL 673347, *10-11, 1999 US Dist LEXIS 13257, *33-34 [SD NY, Aug. 30, 1999]). Id. at 118. Most recently, in Shiotani v. Walters, No. 10 Civ. 1375 (RJS), 2012 U.S. Dist. LEXIS 175464, 2012 WL 6621279 (S.D.N.Y. Dec. 3, 2012) (applying New York law), after determining that “a substantial amount of time elapsed between the Painting’s disappearance and Plaintiff’s commencement of this lawsuit”, and that “Plaintiff did not contact any law enforcement agencies regarding the theft of the Painting, nor did he contact the storage facility where the Painting had been kept”, the Southern District of New York, applying New York Law, found that the doctrine of laches barred the plaintiff’s claim for replevin. In this case, a substantial amount of time elapsed between the Painting’s disappearance and Plaintiff’s commencement of this lawsuit. Plaintiff first received notice that the Painting was missing in July 1985 — nearly twenty-five years before he commenced this action on February 19, 2010. Additionally, notwithstanding the fact that Plaintiff learned of Bernhardt’s sale of the Painting in 1988, Plaintiff did not contact any law enforcement agencies regarding the theft of the Painting, nor did he contact the storage facility where the Painting had been kept. Similarly, Plaintiff does not have any documents relating to the alleged theft of the Painting. . . . 20 * * * Although Plaintiff did not commence this action until nearly twenty-five years had elapsed from the time he first received notice that the Painting had been stolen, he nevertheless asserts that he was diligent in his efforts to search for the Painting. Plaintiff asserts that in 1988 he wrote to Verveckken, Bernhardt’s brother, and others in an attempt to locate Bernhardt and the Painting. He further asserts that, in 1990, he hired an individual who claimed to have access to the Painting, but that this individual was ultimately unable to locate it. These activities, however, all took place immediately following the disappearance of the Painting, and Plaintiff does not identify any steps that he took to search for the Painting between 1990 and 2008 when he learned that the Painting was on loan to the Museum. Plaintiff also fails to explain or account for his failure to report the theft in 1985. Shiotani, 2012 U.S. Dist. LEXIS 175464, at *17-19 (internal citations omitted) (emphasis in original). The Shiotani Court concluded that the plaintiff’s search was not diligent because of “the substantial span of time in which Plaintiff failed to make any efforts to locate the Painting”: [T]the undisputed evidence here clearly establishes that Plaintiff was not diligent in his search for the Painting. This conclusion is consistent with an analogous case in which the Second Circuit held that the owner of a painting had not engaged in a diligent search when she reported the theft of the painting shortly after discovering it was missing and engaged an attorney and an art professor to help find it, but then gave up the search for twenty-four years. DeWeerth v. Baldinger, 836 F.2d 103, 112 (2d Cir. 1987). Here, given the substantial span of time in which Plaintiff failed to make any efforts to locate the Painting, the Court finds that no reasonable 21 fact finder could conclude that Plaintiff carried out a diligent search. Id. at *19. Similarly, in this case, the Museum fails to explain why it failed to take any efforts to locate the Tablet. Specifically, why the Museum never reported the Tablet missing to appropriate authorities at any time, whether at the end of World War II when it discovered that the Tablet was missing; after the 1954 report from a former employee that the Tablet was seen in New York in the hands of a dealer; after the 1983 Grayson publication, which contained the inventory number from the Museum for the Tablet setting forth the 1954 sighting; after the notation was made in its own business records; or after the fall of the Berlin Wall in 1989, or at anytime thereafter. Opportunities to do so presented themselves over and over again for a period of 60 years, yet the Museum sat on its hands and did nothing. In this case, not only did the Museum delay even longer than the Plaintiff in Shiotani, but much like in Wertheimer, the complete lack of due diligence on the part of the Museum has persisted for more than half a century, and has made it impossible for the possessor, in this case, the Estate, to prove that any of its predecessors in interest acquired good title. In any event, had any efforts been taken by the Museum, those efforts would likely have been successful. The Museum’s own expert report acknowledges that “at some point in time, a photograph of the Flamenbaum tablet was shown to a 22 representative at Christie’s, who allegedly claimed the tablet was not authentic.” (R. at 92 n.10.) The report’s explanation for the representative’s error was that “the expert in question was unaware of the Berlin tablet, and that his doubts were raised by the ancient corrections, which may have looked suspicious to him.” (R. at 92 n.10.) Accordingly, had the Tablet been listed in a stolen art registry by the Museum, the expert at Christie’s might have been made aware of its existence and authenticity (or found it in a search) and would not have made such a mistake. The Museum tries to explain away its failures by claiming that that it did not report the Tablet stolen so that it would not be driven further underground. However, such a claim is meritless and disingenuous since it is raised by the Museum for the first time before this Court. Specifically, it was not raised by the Museum in any hearing, post-hearing, or Appellate Division submission, nor was it cited by the Second Department as a reason for its holding. And, indeed, it is not a valid excuse in this case. While reporting the lost art to an international art register is important, it is not the only act that may be taken. There are ways to reasonably pursue lost art without publicizing that the art is missing. For example, as the Surrogate noted (R. at 16), other Museums found numerous methods of searching for missing artwork without publicizing the loss, such as “contacting various German museums and administrative organs, the Allied Control Council, the Soviet Military 23 Administration, the United States State Department, and the Fogg and Germanic museums at Harvard (which were active in locating stolen art), all to no avail.” Kunstsammlungen Zu Weimar v. Elicofon, 678 F.2d 1150, 1156 (2d Cir. 1982) (applying New York law). Therefore, the Second Department’s holding that the Executor “did not establish that the museum failed to exercise reasonable diligence to locate the tablet” is erroneous. This finding is directly contrary to the holding of the Appellate Division, First Department in Wertheimer and, more importantly, this Court’s holdings in Guggenheim II. The Surrogate correctly found that the Museum’s complete lack of due diligence became even more egregious in or shortly after 1954 when the German Assyriologist, H. G. Güterbock, saw what he believed was the gold tablet from Ashur in the possession of a New York dealer. (R. at 89-90.) “Güterbock’s observation is recorded in Grayson 1983 [referring to a publication by Grayson, a former student of Güterbock’s], 16”. Significantly, the Museum’s own records show that the Museum had actual knowledge of the sighting of the Tablet in the possession of a New York dealer in 1954. (R. at 89- 90, 193 (in German), 195 (in English).)5 5 It is worth noting that, at the hearing before the Surrogate’s Court, it was the Museum who attempted, successfully, to have the Museum’s Records admitted into evidence as business records, an exception to the hearsay rule. 24 Significantly, in a footnote in the Museum’s own expert report (R. at 90 n.5) the Museum’s expert specifically quotes the Grayson publication from 1983. Notably, the quotation contains the inventory number that the Museum had assigned to the Tablet, clearly indicating that the Museum had been contacted by either Grayson or Güterbock, since that is the only way those two gentlemen would have learned of the inventory number that the Museum had assigned to the Tablet. Thus, at a minimum, the Museum had knowledge of Güterbock’s 1954 sighting of the Tablet sometime between the citing itself and the book’s publication in 1983. Yet the Museum did nothing. It did nothing after receiving notice of the sighting, after the 1983 Grayson publication setting forth the 1954 sighting; after a notation of the sighting was made in its own business records; or after the fall of the Berlin Wall in 1989. Opportunities to do so presented themselves over and over again for a period of 60 years, yet the Museum did nothing. B. The Museum’s Lack of Due Diligence Has Caused Substantial Prejudice to the Estate The Museum’s inaction, delay, and complete lack of due diligence are extreme. In the words of Wertheimer, this made it “virtually impossible” for the possessor to prove that any of its predecessors in interest had acquired good title. See Wertheimer, 300 A.D.2d at 118. The Museum’s failure in this case has deprived the Estate of any opportunity to mount a defense to the Museum’s claim. 25 Indeed, not only has the Decedent passed away, making it impossible for the Estate to demonstrate how the Decedent may have acquired good title, but also Professor Güterbock has passed away, making it impossible to know precisely when the professor contacted the Museum, who he contacted, and precisely what information he provided to the Museum. This is exactly the type of loss of evidence that constitutes harm in the context of laches. Glenesk v. Guidance Realty Corp., 36 A.D.2d 852, 853, 321 N.Y.S.2d 685 (2d Dep’t 1971); Shiotani v. Walters, No. 10 Civ. 1375 (RJS), 2012 U.S. Dist. LEXIS 175464, at *22, 2012 WL 6621279 (S.D.N.Y. Dec. 3, 2012) (applying New York law) (“[T]he Court finds that the undisputed evidence establishes that Defendants were prejudiced by Plaintiffs delay in initiating this lawsuit because certain witnesses and documents are no longer available”.) The Museum claims no prejudice can be suffered because, according to the Museum, the loss of the Tablet was “documented and widely published to scholars worldwide”, and thus, according to the Museum “the world knew and thus the Executor cannot show causation of any prejudice as a matter of fact and law.” (Museum Br. at 39.) The outrageous nature of this argument is fundamental to its failure. Indeed, even an expert at the world renowned Christie’s auction house, after examining the Tablet, informed the Flamenbaums that it was not authentic. First, 26 to even identify the tablet the Museum was forced to hire Dr. Frahm, an accomplished scholar with a Ph.D., summa cum laude, from Gottingen University. His oral comprehension exams were in Assyriology, Egyptology, and Islamic Studies. His post-doctorate and his Bachelor of Arts degree are both from Heidelberg University and both in Assyriology, Egyptology, and Semitic Studies. He serves as a Professor of Assyriology at Yale University where he also serves as the Director of Graduate Studies in the Department of Near Eastern Languages and Civilizations. (R. at 200-01.) In fact, Dr. Frahm has actually served at the Museum several times, for month long stays, since 1993. (R. at 201.) The list of publications in his curriculum vitae, all in relevant subjects, is nearly ten pages long. (R. at 203-14.) Dr. Frahm’s report, which was procured by the Museum, admits that “at some point in time, the Flamenbaum tablet was shown to a representative at Christie’s, who allegedly claimed the tablet was not authentic.” (R. at 92 n.10.) Importantly, Dr. Frahm forgives the error of the representative at Christie’s and explains how that error may have been made. “[T]he expert in question [who] was unaware of the Berlin tablet, and… his doubts were raised by the ancient corrections, which may have looked suspicious to him.” (R. at 92 n.10.) Thus, the Museum attempts to hold the Decedent and his family to a higher standard than an expert at Christie’s. Indeed, the Museum attempts to impute to 27 each of the Flamenbaums the knowledge of a man who has spent his lifetime studying Assyriology. Apparently, according to the Museum, the Tablet’s loss was so well publicized that the Estate should have known its origin independently, but not so well publicized that an expert at Christie’s should have known the same.6 6 The Museum also claims that the Estate does not have clean hands and that the law will not aid a wrongdoer. This argument, raised for the first time on appeal, is plainly false and constitutes an unsupported accusation against the Estate. The Museum’s alleged basis for these allegations is that, according to the Museum, the Executor and the Estate failed to include the existence of the Tablet as an asset of the Estate in the accounting filed before the Surrogate. First, the Flamenbaums reasonably believed the Tablet was not authentic, as the Museum’s own expert explains is what the Christie’s expert had concluded. Second, the existence of the Tablet was disclosed in the accounting. Even Israel Flamenbaum, the party that made the initial objections and informed the Museum of the Estate’s possession of the Tablet, acknowledges that the Tablet was included in the accounting. The objections state: With regard to Schedule A-2 Executor has failed to accurately schedule the “Coin Collection”... which contains gold coins and artifacts the value of which... is understated and includes one item identified as a “gold wafer”. (R. at 44.) Thus, while Israel alleges that the Tablet was undervalued in the accounting, he clearly acknowledges that the Tablet was disclosed in the accounting. He never makes the accusation that the Museum posits, namely that the Tablet was concealed. The portion of the Accounting setting forth $8,500 in gold coins includes the Tablet. This was based upon an appraisal performed in Nassau County by a reputable coin dealer who said that all the coins, including the Tablet, were not authentic and their value was their weight in gold. As such, the argument that the Executor and the Estate come to the Court with unclean hands constitutes an unsupported accusation against the Executor and seriously mischaracterizes the Record. Not only are these allegations inflammatory and false, but they are dehors the record and defamatory. This is especially true, where, as here, the person against whom these remarks are made, the Executor, is a duly admitted member of the bar of the courts of this State. 28 The prejudice suffered by the Estate, meaning the legal defenses lost as a result of the Museum’s delay, are multi-faceted. The Estate lost the opportunity to demonstrate that the Decedent may have acquired good title to the Tablet. The Estate lost the opportunity to demonstrate that the Decedent acquired the Tablet in a manner adverse to the interest of Museum, including the possibility that the Decedent personally took the Tablet from a rightful owner out of an understandable sense of entitlement for the atrocities the Nazi regime had committed upon the Decedent and his family. The Estate has also lost the ability to question and utilize the testimony of “the German Assyriologist H. G. Güterbock, then a professor at the Oriental Institute of the University of Chicago, [who, in 1954] saw what he believed was the gold tablet from Ashur in the possession of a New York dealer.” (R. at 89-90.) When the same loss of witnesses occurred in Shiotani v. Walters, No. 10 Civ. 1375 (RJS), 2012 U.S. Dist. LEXIS 175464, 2012 WL 6621279 (S.D.N.Y. Dec. 3, 2012) (applying New York law), that court concluded the prejudice was precisely the type envisioned by the New York doctrine of laches. Indeed, through counsel, Defendants have identified three witnesses who would have provided relevant evidence and have provided descriptions of the types of documentary and other evidence that they attempted to obtain but were unable to because of the delay. Accordingly, the Court cannot agree that, merely because one of the Defendants in this matter testified that he was unaware of any missing documents or witnesses, the 29 Defendants cannot establish prejudice. Instead, the Court finds that the undisputed evidence establishes that Defendants were prejudiced by Plaintiffs (sic) delay in initiating this lawsuit because certain witnesses and documents are no longer available. Id. at 19 (internal citations omitted). As such, the Second Department mistakenly concluded that the Estate did not demonstrate that the “museum’s failure to report the tablet as missing to authorities or list it on a stolen art registry prejudiced the estate in its ability to defend against the museum’s claim.” (R. at 1C.) Also prejudicial to the Estate is the loss of another possible defense, that of the statute of limitations, a defense the Museum has made no effort to rebut in its Museum’s Brief. The Museum should not be permitted to benefit from its own wrongful delay. But for these delays, the Museum’s claim for replevin may have been barred by the statute of limitations. As explained in the Brief for Appellant, CPLR 214 provides that an action to recover stolen property must be brought within three years after the action accrues. Where replevin is sought against the party who converted the property, the action accrues on the date of conversion. See Peters v. Sotheby’s Inc., 34 A.D.3d 29, 36, 821 N.Y.S.2d 61 (1st Dep’t 2006) (citing Sporn v. MCA Records, 58 N.Y.2d 482, 488, 462 N.Y.S.2d 413, 448 (1983)); see also Solomon R. Guggenheim Foundation v. Lubell, 153 A.D.2d 143, 146, 550 N.Y.S.2d 618 (1st Dep’t 1990) (“Guggenheim 30 I”), affirmed by the Court of Appeals in Guggenheim II, 77 N.Y.2d 311, 567 N.Y.S.2d 623 (1991). Under New York Law, there are two possible limitation periods relevant to actions for replevin, “[a]s against a thief, a cause of action for replevin accrues, and the limitations period, therefore, begins to run immediately upon the occurrence of the theft, and this is so even if the owner does not know that a theft has occurred”. Guggenheim I, 153 A.D.2d at 146 (internal citations omitted). This is quite opposite from when the action is brought against a party who purchased the property in good faith, for value and without notice of the conversion. Id. In that case, the action accrues only upon the refusal of a demand for its return. See id. (citing Menzel v. List, 22 A.D.2d 647, 647, 253 N.Y.S.2d 43 (1964)). Indeed, the Museum must prove, which it failed to do, that the Decedent was a good faith purchaser (for if the Decedent was a thief, the statute of limitations has run). Thus, if the claim had been brought (1) after the expiration of the statute of limitations against a thief, but (2) prior to the Decedent’s death, the Decedent may have been able to prove that he was the thief and thereby entitled to the benefit of the shorter limitations period, thereby defeating the Museum’s claim for replevin of the Tablet. This is especially true where the Decedent, a survivor of Auschwitz, was, in the aftermath of the war, like so many others, free to move about Berlin in 31 an effort to find family members. Many of these people not only took refuge in the Museum, but took items to barter for food and for travel out of the region. The Director of the Museum testified that at the end of the war the Museum lost control of its collections to the general public: [T]he situation was very difficult at the end of the world war and briefly after the war there was so many people who came into the museum, both to take refuge or work there at the museum, so it was very difficult, and I cannot find myself in that position to accuse anyone. (R. 178). Therefore, the Museum’s inordinate delay may have caused the Decedent to lose the benefit of a more advantageous statute of limitations. POINT II THE SURROGATE ERRED IN DETERMINING THAT THE MUSEUM HAD TITLE TO THE TABLET The Museum defends the denial of the Estate’s cross-appeal with erroneous arguments. First, the Museum claims that no appeal could lie because the Estate was not aggrieved by the Surrogate’s Court decision. This is not so. The Surrogate mistakenly concluded the Museum had title. But for this finding, the Museum’s claim for replevin would have died instantly, without the need for the application of laches. As such, the Estate was aggrieved by the Surrogate’s decision. 32 However, even if it were true that the Estate was not aggrieved by the Surrogate’s decision, the appeal would certainly lie after the Appellate Division incorrectly reversed the Surrogate’s Court application of laches. Upon reversal, the cross-appeal should have been heard. Second, the Museum claims that the Estate “did not present any evidence demonstrating that the Decedent or the Estate ever lawfully came into possession of the Tablet.” (Museum’s Br. at 46.) Indeed, that is the point. Due to the Museum’s delay, all evidence has died, including the testimony of Decedent and Professor Güterbock. It is the Museum’s inordinate delay that made it impossible for the Estate to prove good title. As such, the Museum has delayed and caused prejudice to the Estate. The Museum now wishes to use that very prejudice to support its claim. The Museum overlooks that it is not the responsibility of the Estate to demonstrate title to overcome the Museum’s claims. On the contrary, it is the Museum’s responsibility to prove it has title and a superior right of possession to support its claim. The Museum has failed to do so. Legal ownership or “superior right to possession” cannot merely exist at some time in history, but must be an “immediate” right existing at the time of commencement of the action. See Dubied Mach. Co. v. Vermont Knitting Co., Inc., 739 F. Supp. 867, 872 (S.D.N.Y. 1990) (sitting in diversity and applying New 33 York law) (“To establish a cause of action under CPLR Article 71, plaintiff ‘must show that [it] has an immediate and superior right to possession of the [goods].’”) In Shiotani v. Walters, No. 10 Civ. 1375 (RJS), 2012 U.S. Dist. LEXIS 175464, 2012 WL 6621279 (S.D.N.Y. Dec. 3, 2012) (applying New York law), the Court demonstrated that principle. In Shiotani, the defendants argued, inter alia, that the plaintiff failed to demonstrate title because “title could not have passed from ARL to Plaintiff in the bankruptcy proceeding because there is no evidence that ARL owned the painting at the time it sought bankruptcy protection.” Id. at 11. The Court agreed, stating that “Plaintiff has not introduced any evidence to show that ARL owned the painting when it entered bankruptcy.” Id. at 11-12. Accordingly, the defendants were entitled to summary judgment. Id. Similarly, in this case, the Museum has not presented any evidence that title existed in it either (1) at the time of the taking, or (2) at the time of commencement of this action. Indeed, the Museum failed to demonstrate it ever had Title. At the hearing, there were no documents presented by the Museum indicating that the Museum acquired the Tablet in a legal manner. The Museum’s only witness was the Museum’s Director. Under cross-examination, she confirmed that she had never personally seen any documents granting the Museum the right to excavate the Tablet or to remove it from its country of origin. In fact, the testimony does not even confirm the existence of the documents, only that “[i]f there was an 34 official excavation” the documents would be held in the Office of Foreign Affairs. As such, the Museum failed to prove it ever had legal possession of the Tablet. [Counsel for the Estate:] You have a written record that shows it was an official excavation? * * * [Museum’s Director:] Yes. [Counsel for the Estate:] What is that record and where is it? [Museum’s Director:] It must be at the office of Foreign Affairs among the records in Berlin. [Counsel for the Estate:] And do you have that record with you today? [Museum’s Director:] No, but it has never - - I have never been asked to do so before up to this time. The demand has never been raised. [Counsel for the Estate:] Have you ever seen that record? [Museum’s Director:] No, not personally. * * * [Counsel for the Estate:] Do you have any written document from the sovereign government of Turkey allowing the German museum to acquire that item? 35 [Museum’s Director:] If there was an official excavation permit to the effect that there would be, that there was an arrangement, an agreement between the then German Empire, the Kaiser, that the discoveries made would be shared. [Counsel for the Estate:] And have you ever seen that record? * * * [Museum’s Director:] Not personally. [Counsel for the Estate:] Then I can assume you do not have that record in court with you today? [Museum’s Director:] No. As I said before, these documents are to be found in the office in Berlin for the external (sic) or Foreign Affairs Department or Foreign Ministry. (R. at 167-169) (emphasis added). Further, even if the Museum acquired the Tablet in a legal manner and had legal title or possession, its claim would still fail. As explained more fully in the Brief for Appellant on pages 32 to 43, Russia had claimed the tablet as Spoils of War, then the Museum would have been deprived of any legal title to the Tablet under Russian and international law at the time of the taking. If Germany was deprived of title to the Tablet at the time Russia claimed it as Spoils of War, then Germany lacked title to the Tablet on the date of commencement of its claim. In 36 the absence of any proof demonstrating the Museum has title, its claim for replevin must fail. Third, the Museum claims that even if “Russian soldiers stole the Tablet, this fact, even if true, would not give the Estate good title.” The Museum deliberately mischaracterizes the Estate’s argument. It is clear that the Estate is not arguing that it is entitled to a declaration that it has good title since a replevin action is not the appropriate proceeding to make such a claim. A replevin action merely seeks to settle possessory rights of the parties. The Estate, contrary to the Museum’s position, simply states that (1) if Russia took the Tablet then the Museum’s claim of title, if any, is abolished under the Spoils of War doctrine, and (2) without title the Museum cannot claim a superior possessory interest in the Tablet as compared to that of the Estate, so its replevin claim must fail as a matter of law. Finally, the Museum states that “[w]hen an Appellate Division affirms the trial Court’s findings of fact, those findings are binding on the Court of Appeals.” (Museum’s Br. at 48.) However, in this case, the Appellate Division did not affirm, rather it simply refused to hear the Estate’s cross-appeal at all, and made no findings of fact relevant to the cross-appeal. 37 POINT III THE REMAINDER OF THE ARGUMENTS THE MUSEUM RAISES FOR THE FIRST TIME ON APPEAL ARE WITHOUT MERIT First, it is patently improper for the Museum to raise arguments for the first time on appeal and, therefore, this Court should not consider the Museum’s arguments. Justice Kaye, in Bingham v. New York City Transit Auth., 99 N.Y.2d 355 (2003), stated: As we have many times repeated, this Court with rare exception does not review questions raised for the first time on appeal. Unlike the Appellate Division, we lack jurisdiction to review unpreserved issues in the interest of justice. Id. at 359; see also In re Estate of Sbuttoni, 16 A.D.3d 693, 694, 792 N.Y.S.2d 187, 188 (2d Dep’t 2005) (concluding appellant’s new arguments with respect to the statute of limitations were “improperly raised for the first time” on appeal). Second, and as demonstrated more fully below, even if this Court does consider the Museum’s new arguments, each argument raised by the Museum fails as a matter of law and is without merit. A. The Application of Laches is Permissible and is Not Preempted by Either the 1970 UNESCO Treaty or the 1954 Hague Convention Because Neither Were in Effect at the Time the Tablet was Taken Contrary to the Museum’s assertion, the doctrine of laches is not preempted by either the 1970 UNESCO Convention on the Means of Prohibiting and 38 Preventing the Illicit Transport, Export, and Transfer of Ownership of Cultural Property (the “UNESCO Treaty”) or the 1954 Hague Convention on the Protection of Cultural Property in the Event of Armed Conflict (the “Hague Convention”) as neither the UNESCO Treaty or the Hague Convention were in effect at the time of the taking of the Tablet and therefore neither apply to the instant action. Indeed, the clear and unambiguous language of the UNESCO Treaty states that it only applies to the import of cultural property stolen from a museum between signatories to the treaty after it went into effect on April 24, 1972. Here, the Tablet was already in the United States by at least 1950 and we know this because the Executor of the Estate was born in the United States in 1950 and the Decedent brought the Tablet into the United States before the Executor was born. Thus, the UNESCO Treaty is not applicable to this action. In fact, the Museum intentionally fails to provide the full text of Article 7 of the UNESCO Treaty in an effort to misrepresent its applicability to the Court. The Museum’s Brief states that Article 7 of the UNESCO Treaty requires signatory nations: (b) (i) to prohibit the import of cultural property stolen from a museum or a religious or secular public monument or similar institution in another state party . . . provided that such property is documented as appertaining to the inventory of that institution; 39 (b) (ii) at the request of the state party of origin, to take appropriate steps to recover and return any such cultural property . . . provided, however, that the requesting State shall pay just compensation to an innocent purchaser or to a person who has valid title to that property (Museum’s Br. at pp. 25-26.) However, the full relevant text of Article 7 of the UNESCO Treaty, which includes the Museum’s omissions, requires signatory nations: (b) (i) to prohibit the import of cultural property stolen from a museum or a religious or secular public monument or similar institution in another State Party to this Convention after the entry into force of this Convention for the States concerned, provided that such property is documented as appertaining to the inventory of that institution; (b) (ii) at the request of the State Party of origin, to take appropriate steps to recover and return any such cultural property imported after the entry into force of this Convention in both States concerned, provided, however, that the requesting State shall pay just compensation to an innocent purchaser or to a person who has valid title to that property. . . . (emphasis on portions intentionally omitted by the Museum). Thus, the omitted text of the UNESCO Treaty unambiguously only prohibits the import of stolen cultural property from museums after the UNESCO Treaty went into force in April 24, 1972. Therefore, as established above, since the Tablet was already in the United States as of at least 1950, the UNESCO Treaty does not 40 govern the instant action. Indeed, it is clear that the drafters of the UNESCO Treaty and the signatory states did not intend the convention to apply to goods imported prior to the effective date of the treaty. For doing so, would require the signatory states to empty their museums, as history itself demonstrates are filled with goods stolen from the cultures of the world. Furthermore, to claim the benefit of the UNESCO Treaty the sovereign or state needs to be a signatory to the UNESCO Treaty. At the time the Tablet was taken from the Museum in or before 1945, the sovereign of the territory where the taking took place was either the Democratic Republic of East Germany, which does not appear to have ever ratified the treaty, or the Soviet Union, which did not ratify the UNESCO Treaty until 1988. Additionally, even if this Court was to consider the unified Federal Republic of Germany to be the sovereign where the Tablet was taken, Germany did not ratify the UNESCO Treaty until 2007. Thus none of the possible sovereigns of that territory ratified the UNESCO Treaty until at least 1988, and therefore, at the time of the taking, none of the sovereigns were signatories to the UNESCO Treaty. The Museum cannot now attempt to obtain the benefit of the UNESCO Treaty for two reasons. First, the Museum (and the sovereign it claims to be a subdivision of) was not a signatory to the UNESCO Treaty when the events that give rise to this action took place. Second, the United 41 States was not a signatory to the UNESCO Treaty at the time the Tablet was brought within the borders of this country. In any event, the Museum was notified of the location of the Tablet as recently as April of 2006 (R. at 46). The Museum did not bring its claim until October 5, 2006. On the day the Museum filed its notice of claim, Germany was not yet a signatory of the UNESCO Treaty, and, therefore, the Museum is unable to rely upon the benefits of the UNESCO Treaty. Finally, as can be seen from the quoted sections of the UNESCO Treaty above, if cultural property is to be returned, just compensation must be paid. In this case neither the Museum nor the sovereign of the territory with has made any formal offer of compensation whatsoever to the Estate. For much of the same reasons that the UNESCO Treaty does not apply to the instant action, the Hague Convention is not applicable. The 1954 Hague Convention did not go into effect until August 7, 1956, at least five years after the Tablet was already in the United States. Thus, the Hague Convention does not govern the instant action. Even assuming that the Hague Convention does apply, the Museum only argues that the Hague Convention signatories “undertake to prohibit, prevent and, if necessary, put a stop to any form of theft, pillage, or misappropriation of, and any acts of vandalism directed against, cultural property.” (Museum’s Br. at p. 42 24). However, to the extent that the Museum can prove that the Tablet was indeed stolen, which is has not done or even alleged, the Museum does not argue that the Hague Convention provides a remedy for those wrongdoings that took place before it was drafted. Indeed, there is no such remedy. The quoted language of the Hague Convention upon which the Museum relies does not support the proposition that the Hague Convention applies to goods that were stolen prior to the effectiveness of the Hague Convention. Therefore, it is not applicable to the instant action. Moreover, the Museum has not established that the Tablet was stolen; the Museum has only shown that the Tablet went missing. Indeed, no police report has ever been filed. Thus, if the Decedent had indeed stolen the Tablet, then as discussed above, the statute of limitations has run. Accordingly, applying laches to the instant action does not violate either the 1970 UNESCO Treaty or the 1954 Hague Convention as neither was in effect at the time that the Tablet was taken. B. The Museum is Not Entitled to Rely on Federal Law Designed to Protect Foreign Sovereigns The arguments regarding the act of state doctrine and the Foreign Sovereign Immunities Act, also raised by the Museum for the first time on appeal, must fail as each argument is raised on the basis that the Museum is a sovereign, which is not the case. A museum is not a government nor is it a governmental organ or 43 agency. In addition, even if, arguendo, the Museum herein was serving a traditionally recognized governmental purpose, the sovereign itself was not a recognized government and, therefore, is not entitled to the benefits of the legal doctrines cited by the Museum. Thus, all of the arguments raised by the Museum for the first time on appeal are both inapplicable and meritless. The courts of this state have held that a museum, “however important its cultural purpose” does not “perform services that have been recognized as a governmental function”. Metro. Museum Historic Dist. Coal. v. De Montebello, 3 Misc. 3d 1109(A), 787 N.Y.S.2d 679 (Sup. Ct., N.Y. Cty. 2004) aff’d sub nom., 20 A.D.3d 28, 796 N.Y.S.2d 64 (1st Dep’t 2005). Even if the Museum was performing a state function when it delayed in bringing its claim, the “state” it was affiliated with (the Soviet controlled German Democratic Republic) would have no claim, as the “state” was not, and is not, recognized by the courts of the State of New York. “The court will take judicial notice that the German Democratic Republic is not recognized by our Government.” Upright v. Mercury Bus. Machines Co., 24 Misc. 2d 571, 573, 203 N.Y.S.2d 288, 289-90 (Sup. Ct., N.Y. Cty. 1960) (“[T]he recognition of that legal entity is barred by the foreign policy of the United States Government”). Accordingly, had the Museum brought this action in a timely manner, it would have taken the position that it was not a governmental agency; and indeed, it 44 would have been correct.7 As a non-governmental body, it would not be entitled to the protections of the act of state doctrine or the Foreign Sovereign Immunity Act. 1. The Act of State Doctrine is Inapposite The Museum attempts to use the act of state doctrine to prevent this Court from reviewing and judging the tremendous lack of due diligence conducted by the Museum and to prevent laches from barring the Museum’s claim to the Tablet. The basic premise of the act of state doctrine is that “‘the courts of one country will not sit in judgment on the acts of the government of another done within its own territory.’” Perez v. Chase Manhattan Bank, 61 N.Y.2d 460, 469 (1984) (quoting Underhill v. Hernandez, 168 U.S. 250, 252 (1897)); see also Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401 (1964) (“The act of state doctrine in its traditional formulation precludes the courts of this country from inquiring into the validity of the public acts of a recognized foreign sovereign power committed within its own territory.”). From this concept three necessary elements are discernible: a (1) recognized foreign sovereign must commit (2) an act of state that (3) is within its own territory. See, e.g., U.S. v. Portrait of Wally, 663 F. Supp. 2d 232, 247 (2009) (noting U.S. courts may not “invalidate the public 7 Significantly, even after waiting more than half a century to bring this action the Museum has brought its claim in its own name and not in the name of the Federal Republic of Germany, evidencing its own belief that the Museum is not a subdivision of the sovereign state entitled to the benefits of the Foreign Sovereigns Immunities Act or other federal statutes granting special protections to sovereigns. 45 acts of foreign sovereigns within their own jurisdictions.”) (emphasis added). Further, the Museum “bears the burden of showing that abstention is justified.” Id. In addition, while the courts must respect the independence of another sovereign state, “courts must be mindful of their obligation ‘to decide cases and controversies properly presented to them.’” Wally, 663 F. Supp. 2d at 247 (quoting W.S. Kirkpatrick & Co. Inc. v. Envtl. Tectonics Corp., Int’l, 493 U.S. 400, 409 (1990)). Thus, “even though the validity of the act of a foreign sovereign within its own territory” may be called into question, “the policies underlying the act of state doctrine may not justify its application.” W.S. Kirkpatrick, 493 U.S. at 409. The United States Supreme Court has identified two such jurisprudential foundations for the act of state doctrine. First, the act of state doctrine was viewed as “an expression of international law, resting upon ‘the highest consideration of international comity and expediency.’” Id. at 404 (quoting Oetjen v. Central Leather Co., 246 U.S. 297, 303-04 (1918)). More recently, the United States Supreme Court has described the Doctrine “as a consequence of domestic separation of powers.” W.S. Kirkpatrick, 493 U.S. at 404; see also Republic of Iraq v. ABB AG, No. 08 Civ. 5951 (SHS), 2013 U.S. Dist. LEXIS 16154, at *39 (S.D.N.Y. Feb. 6, 2013) (“Whether or not the issues in this case come within the act of state doctrine, the policy reasons for the doctrine counsel against its application here. The doctrine serves domestic separation of powers by restraining 46 the judiciary from interfering with the Executive Branch’s conduct of foreign affairs.”). In this case, to the extent this Court both considers the Museum performing a traditional governmental function and associated with a recognized sovereign, the Court will be reviewing the acts (or lack of action) of the Democratic Republic of East Germany between 1945 and 1989 and the acts of the Federal Republic of Germany between 1989 and the present. With respect to the acts of the Democratic Republic of East Germany, the act of state doctrine is no longer applicable as that sovereign is no longer in power. The Second Circuit Court of Appeals has noted that: [T]he danger of interference with the Executive’s conduct of foreign policy is surely much less than the typical case where the act of state is that of the current foreign government . . . “The balance of relevant considerations may also be shifted if the government which perpetrated the challenged act of state is no longer in existence, as in the Bernstein case, for the political interest of this country may, as a result, be measurably altered.” [Banco Nacional De Cuba v. Sabbatino, 376 U.S. 398, 428 (1964)]. Republic of Philippines v. Marcos, 806 F.2d 344, 359 (2d Cir. 1986). Similarly, with respect to the acts of the Federal Republic of Germany, the act of state doctrine is also inapplicable. Where a foreign sovereign brings its claims to the courts of the United States, it waives the application of the act of state doctrine: 47 [T]he act of state doctrine reflects respect for foreign states, so that when a state comes into our courts and asks that our courts scrutinize its actions, the justification for application of the doctrine may well be significantly weaker. Restatement (Revised) of Foreign Relations Law § 469 comment e (Tent. Draft No. 7, 1986). Id. Accordingly, the act of state doctrine is not applicable to the Museum because the two recognized sovereigns the Museum could associate with is either no longer a sovereign (the Democratic Republic of East Germany) or is a sovereign that waived its application of the state doctrine by bringing its claim for the Tablet in the United States (the Federal Republic of East Germany). Furthermore, neither of the policies justifying the act of state doctrine favors its application here, nor has the Museum met its burden in showing that abstention in this case is justified. As in Republic of Iraq, 2013 U.S. Dist. LEXIS 16154, at *11, where the Republic of Iraq brought to the United States District Court claims concerning “the suffering of its people,” here the Museum has sought out the United States courts to decide which party has a possessory claim to the Tablet. To the extent that any party has called into question the validity of a foreign government’s acts in contravention of the act of state doctrine, it is the Museum that has done so. Similarly, just as the Republic of Iraq court was compelled to find that the underlying policies for the act of state doctrine “tilt[ed] against the doctrine’s application,” so too must the Court here find that a balancing of the state 48 doctrine’s foundational policies weigh against its invocation because the foreign sovereign has knowingly and voluntarily availed itself of the New York courts. Id. at *40. Moreover, the Museum has failed to show that abstention is justified because this case does not involve an official act of a sovereign state, thereby defeating at least one of the three required elements of the act of state doctrine. Analyzing whether or not a nationally owned museum’s conduct can be attributed to its sovereign is a legal question. See id. at *44. For, “it is possible for the persons who,” or entities that, “comprise the government to act without acting as the government.” Id. at *49. While the museum strenuously attempts to torture its conduct towards the Tablet into the mold of governmental conduct taken under color of authority, it is in actuality “commercial” or “private” conduct, which does not justify application of the state doctrine. See Saudi Arabia v. Nelson, 507 U.S. 349, 360 (1993). An essential “factual predicate for application of the act of state doctrine is an official act of a foreign sovereign.” Tismo v. M/V Ippolytos, 776 F. Supp. 928, 933 (D.N.J. 1991). Examples of such official acts include the “defendant’s detention of plaintiff within its border … the government’s seizure of property and questions of title thereto … and a government’s expropriation of goods.” Id. (citations omitted). Here, the court is not being asked to judge the validity of an official act, but the reasonableness of the Museum’s commercial 49 conduct in connection with its failure to exercise due diligence is seeking to locate the Tablet. 2. The Foreign Sovereign Immunities Act is Inapposite The Museum argues that it should be afforded the protection of the Foreign Sovereign Immunities Act. However, the Museum fails to cite a single legal authority in support of its conclusion. In fact, all the authorities it cites supports the Estate’s claim. The Foreign Sovereign Immunities Act is to be used as shield from litigation, not as a sword. In Republic of Iraq v. First Nat. City Trust Co., 207 F. Supp. 588 (S.D.N.Y. 1962), the court noted that, [T]he Republic of Iraq could have stood on its sovereign immunity, treated as void any determination of the Surrogate’s Court and made a claim on the United States for property involved. However, it chose to waive its sovereign immunity to the extent of bringing this action and leaving it to the Court to adjudicate its claim. Id. at 590. Similarly, here, the Museum voluntarily waived whatever sovereign immunity it may have had, and brought its claim to the Courts of the State of New York. As such, even if this Court is to consider the Museum’s argument based on the Foreign Sovereign Immunities Act, raised for the first time on appeal, it must fail as a matter of law. 50 CONCLUSION Based on the foregoing, the Appellate Order should be reversed and the Decision and Order of the Surrogate’s Court, Nassau County, should be reinstated as modified by the deletion of that branch of the Surrogate’s Order which held that the Museum has title to the Tablet. Dated: Garden City, New York September 18, 2013 JASPAN SCHLESINGER LLP Attorneys for Appellant Hannah Flamenbaum /s/ Steven R. Schlesinger By: _________________________ Steven R. Schlesinger, Esq. Seth A. Presser, Esq. Richard A. Paladino, Esq. 300 Garden City Plaza Garden City, New York 11530 (516) 746-8000 D#910324v3