On June 6, 2024, Justice Borrok of the New York County Commercial Division issued a decision in Bennigson v. Solomon R. Guggenheim Found., 2024 NY Slip Op. 24164, holding that claims relating to stolen artwork were barred by laches even though they were not barred by the statute of limitations under the federal Holocaust Expropriated Art Recovery Act, explaining:
The equitable doctrine of laches bars the claims of a plaintiff whose unreasonable delay in prosecuting a claim or protecting a right has worked to prejudice rights of the defendant. A delay of as little as one year has been held sufficient to establish the defense. Knowledge of prior generations is imputed to current claim making heirs such that the clock does not reset for each successive generation. If the opposite were the case, it would defeat the purpose of the doctrine. Courts have held that laches is appropriate where the delay results in deceased witness, faded memories, lost documents, hearsay testimony of questionable value, and the injustice of having to defend under these circumstances. Where the original owner’s lack of due diligence and prejudice to the party currently in possession are apparent, the issue may be resolved as a matter of law.
Laches and other equitable defenses have been applied by courts to claims which might otherwise have been revived under the HEAR Act. The HEAR Act explicitly precludes application of defenses at law relating to the passage of time but does not interfere with the application of defenses at equity, such as laches.
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As discussed above, in Zuckerman v Metro. Museum of Art, the Second Circuit explicitly held that laches is an available defense to claims revived under the HEAR Act. In that case, the Second Circuit applied New York law to a Nazi-era artwork recovery action and held that the facts of that case established laches and precluded the claim. More specifically, in Zuckerman, the Leffmans were stripped of their property rights and were forced to sell their property and businesses to Aryan corporations for only nominal compensation. The Leffmans engaged in a so-called triangular agreement by which they purchased a house but also pre-agreed to later sell it back to the (non-Nazi) counterparty at a substantial loss — this was one of the few methods of moving money to avoid the the ever-tightening regulations governing the transfer of assets outside of Germany, which reflected their desperation. There was no mention of any direct Nazi-intervention in these sales. The painting at issue in that case was sold in 1938 to Mr. Rosenberg (there was no allegation he had any relationship whatsoever with the Leffmans) who loaned it to the Museum of Modern Art (the MoMA) for a short time. In 1952, the painting was donated to the Metropolitan Museum of Art (the Met), where it resided ever since. The Leffmans successfully escaped to Brazil in October 1938 and returned to Switzerland in 1947, where they lived out the remainder of their lives (the wife surviving the husband and living until 1966). After they returned to Switzerland, the Leffmans pursued their Nazi-era losses but never pursued the painting at issue in Zuckerman. Neither the Leffmans nor their heirs made demand for the artwork until 2010. On these facts, the Second Circuit found undue delay in that (i) the Leffmans were a financially sophisticated couple who actively and successfully pursued other claims for Nazi-era losses, (ii) they knew the identity of the buyer, (iii) the lost property was not difficult to locate, (iii) the plaintiffs did not allege that the buyers themselves exerted any undue or improper pressure on the sellers, (iv) the original owners and their heirs could have contacted the purchasing dealer, the MoMA, or the Met at any time but did not, (v) since at least 1967, the Met listed the Leffmans as prior owners (with some slight but inconsequential inaccuracy as to the dates), and (vi) none of the heirs demanded that the painting be returned until 2010. The Second Circuit likewise found prejudice in that the approximately 60 year delay since the end of World War II resulted in deceased witnesses, faded memories, and hearsay testimony of questionable value as well as the likely disappearance of documentary evidence.
As discussed above, and giving the plaintiffs every favorable inference as the Court must, it is apparent at this stage of the litigation that laches requires dismissal. As in Zuckerman, decades have elapsed since the Sale (over 80 years) and the AC acknowledges that all of the individuals who could testify with direct knowledge that the Sale was tainted, as to the coercive environment that the Sale occurred in or as to why this claim was not brought earlier have passed away, including Karl Adler and his wife who passed away in 1946 and 1957, respectively, J. Thannhauser who passed away in 1976, Karl Adler’s children who passed away in 1989, 1990 and 1994 (some 20 years after the Guggenheim first contacted them about the Painting and its provenance), Mr. Catton Rich (who had been in direct contact with Eric Adler about the Painting) who passed away in 1976, and Mr. Messer of the Guggenheim (who oversaw the bequest) who passed away in 2013. Undeniably, the Guggenheim is prejudiced by this substantial delay and lack of diligence such that dismissal is required.
To be clear it is not just the passage of time and the death of the relevant witnesses that establishes laches and requires dismissal. The AC asserts without appropriate explanation that it was only in 2013 that Plaintiff Bennigson learned for the first time that his family might have a possessory interest in the Painting, but this first time discovery 80 years post-Sale and approximately 47 years after the Guggenheim asked Eric Adler about the Adlers’ connection to the Painting demonstrates an insurmountable lack of diligence in connection with a famous painting, which has been on prominent display at the Guggenheim since at least 1978 and at other museums essentially since its Sale, including being on display while World War II was still raging.
As discussed above, in the 1970s, the Guggenheim sought out Eric Adler (and much to the latter’s surprise, successfully located him) and specifically requested his assistance in confirming the provenance of the Painting. No one, including Eric Adler, voiced any concerns of any kind about the Sale or the circumstances surrounding the Sale. Indeed, Eric Adler’s only query was as to how the Guggenheim located him and, instead of articulating any concern over the circumstances under which his father sold the Painting, he merely confirmed the dates of his parents’ ownership. As such, and as in Peters, the plaintiffs’ claim some 80 years after the fact that the Sale to a non-Nazi collaborator might have been improper, tainted and therefore void must be dismissed.
(Internal quotations and citations omitted).