2017-02-27 14:30:14
A Suit Over Schiele Drawings Invokes New Law on Nazi-Looted Art

When the Holocaust Expropriated Art Recovery Act was adopted unanimously by Congress in December, it was widely praised as a necessary tool to help the heirs of Holocaust victims recover art stolen from their families during World War II.

Now the efficacy of the HEAR Act, as it is known, may get an early test in New York State Court, where the heirs of Fritz Grunbaum, an Austrian Jewish entertainer, are citing it in efforts to claim two valuable colorful drawings by Egon Schiele.

Grunbaum’s extraordinary 449-piece art collection has been generating controversy almost since the Nazis confiscated it from his Vienna apartment in 1938 and shipped him to his death in the Dachau concentration camp. For years, his heirs have argued that the collection, which included 81 Schieles, was stolen by the Nazis.

Collectors, dealers and some museums, however, have countered that the art was inventoried by the Nazis but not stolen, and that Grunbaum’s sister-in-law sold 53 of the Schieles in a legitimate transaction, to a Swiss art dealer, in 1956. They say that previous court cases have determined that the Schieles were not stolen and that no further claims should be considered on those works.

But the Grunbaum heirs contend that the previous claims, in this case and others, were settled on the basis of legal technicalities, not the merits of the argument that the art was looted by the Nazis, and that this is just the sort of case that the law was enacted to address.

In arguing for the legislation last year, one of its sponsors, Senator Ted Cruz, Republican of Texas, said that it would ensure that “claims to Nazi-confiscated art are not unfairly barred by statutes of limitations and other similar time-based nonmerits defenses.”

The law created a federal statute of limitations for such claims: six years from the time of “actual discovery” of the art’s whereabouts. It is in line with the spirit of two international proclamations — the so-called Washington Principles of 1998, and also the Terezin Declaration from 2009 — stating that technicalities should not be employed to prevent stolen property from being returned to rightful owners. The legislation has also been cited by lawyers for the estate of Alice Leffman, in a federal suit against the Metropolitan Museum of Art, seeking restitution of a valuable Picasso painting, “The Actor.” In court filings, the museum has asked that the case be dismissed, and has stated that it does not believe that the Picasso was stolen.

The two Schieles now being pursued, “Woman in a Black Pinafore” (1911) and “Woman Hiding Her Face” (1912), were part of the 1956 sale to the Swiss dealer. But Raymond Dowd, a lawyer for the Grunbaum heirs — Timothy Reif, David Fraenkel and Milos Vavra — argues that the circumstances of that transaction have never been fully explored and that his clients did not discover the lost works until they were noticed for sale at an art fair in 2015.

Mr. Dowd and one of the heirs, Mr. Vavra, previously pursued the restitution of another Schiele drawing from the Grunbaum collection, “Seated Woman With Bent Left Leg (Torso).” In that litigation, filed in 2005, the court ruled in favor of a Boston businessman, David Bakalar, who had bought the work in 1963. It said too much time had passed since the Grunbaum heirs had made their claim, causing evidence to be lost. Mr. Dowd appealed the ruling, but lost.

In 2015 Mr. Bakalar, who had paid $4,300 for the drawing, sold it at auction for $1.3 million.

Mr. Dowd filed his new lawsuit in November of that year, shortly after learning that Richard Nagy, a London art dealer and Schiele specialist, was trying to sell “Woman in a Black Pinafore” and “Woman Hiding Her Face” at an art fair at the Park Avenue Armory. The two drawings are valued together at roughly $5 million, according to Mr. Dowd.

Mr. Nagy has fought the claim, arguing in court papers that he acquired both artworks “in good faith and in a commercially reasonable manner” after the United States Supreme Court declined to hear Mr. Dowd’s appeal of the Bakalar case. His lawyers argue that the previous court rulings about the Schieles from the Grunbaum collection were not based on legal technicalities but on a finding that they had been properly conveyed in 1956.

Still, last year Judge Charles Ramos of the New York State Supreme Court ordered that the two drawings be held by Mr. Nagy’s shipping agent, pending the resolution of the legal action. Mr. Nagy and his lawyer, Thaddeus Stauber, have appealed.

Mr. Stauber said in an interview that the case against Mr. Nagy should be dismissed.

“It is what we call ‘Bakalar 2,’” he said. “It’s the same case being brought by these heirs and their counsel over the exact same art collection, so the case shouldn’t go forward.”

He said Mr. Dowd was wrong to invoke the act because the law says it does not apply to cases where there has already been a final judgment; the Bakalar case, he said, had determined that the Grunbaum Schieles weren’t stolen.

Mr. Stauber added: “It’s kind of offensive to everybody who’s been involved in this field, claimants and otherwise, to keep touting something which the courts have decided. You had your trial. Evidence was presented. It’s over.”

But Agnes Peresztegi, the president and legal counsel of the Commission on Art Recovery — an organization founded by the billionaire art collector Ronald S. Lauder to encourage the restitution of artworks stolen during World War II — said in an interview that she agreed with Mr. Dowd. The “Bakalar” case was not decided on the merits, she said, but on the technical issue that too much time had passed to pursue a claim. She said she welcomes the use of the new law in deciding, once and for all, whether many of the Schieles in the Grunbaum collection, including the two owned by Mr. Nagy, were stolen.

“My view,” she said, “is that all claimants that have a nonfrivolous case will have a day in court, and cases without facts to support them will be dismissed.”

Mr. Dowd remains optimistic for his clients. “We believe that the expert report and scholarship of Dr. Jonathan Petropoulos, the world’s leading expert in this field, will persuade the court that the evidence shows that Fritz Grunbaum was a victim of Nazi art looting,” he wrote in an email.