Bakalar v. Vavra

11-4042-cv Bakalar v. Vavra UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. 1 At a stated term of the United States Court of Appeals 2 for the Second Circuit, held at the Daniel Patrick Moynihan 3 United States Courthouse, 500 Pearl Street, in the City of 4 New York, on the 11th day of October, two thousand twelve. 5 6 PRESENT: DENNIS JACOBS, 7 Chief Judge, 8 ROBERT D. SACK, 9 Circuit Judge, 10 JOHN GLEESON, 11 District Judge.* 12 13 - - - - - - - - - - - - - - - - - - - -X 14 DAVID BAKALAR, 15 Plaintiff-Counter-Defendant- 16 Third-Party-Defendant- 17 Appellee, 18 19 -v.- 11-4042-cv 20 21 MILOS VAVRA, LEON FISCHER, 22 Defendants-Counter- 23 Claimants-Appellants. 24 - - - - - - - - - - - - - - - - - - - -X * The Honorable John Gleeson, United States District Judge for the Eastern District of New York, sitting by designation. 1 1 2 FOR APPELLANT: Raymond J. Dowd, Luke McGrath, 3 Thomas V. Marino, Dunnington, 4 Bartholow & Miller LLP, New 5 York, NY. 6 7 FOR APPELLEES: William L. Charron, Pryor 8 Cashman LLP, New York, NY. 9 10 Appeal from a judgment of the United States District 11 Court for the Southern District of New York (Pauley III, 12 J.). 13 14 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED 15 AND DECREED that the judgment of the district court be 16 AFFIRMED. 17 18 This is an ownership dispute concerning a 1917 drawing 19 by Egon Schiele (the “Drawing”), between David Bakalar, who 20 seeks a declaration that he owns it by purchase from a 21 dealer, and Milos Vavra and Leon Fischer, who are heirs of 22 Austrian cabaret performer, Fritz Grunbaum, who owned it 23 before he was murdered by the Nazis in 1941. The United 24 States District Court for the Southern District of New York 25 (Pauley III, J.) awarded judgment to Bakalar on the basis of 26 laches. Bakalar v. Vavra, 819 F. Supp.2d 293, 307 (S.D.N.Y. 27 2011). “Following a bench trial, we set aside findings of 28 fact only when they are clearly erroneous . . . . However, 29 we review de novo the district court's conclusions of law 30 and its resolution of mixed questions of law and fact.” 31 Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184, 32 199 (2d Cir. 2003) (citations omitted). We assume the 33 parties’ familiarity with the underlying facts, the 34 procedural history, and the issues presented for review. 35 36 [1] In a title action under New York law, a good faith 37 purchaser of an artwork has the burden of proving that the 38 work was not stolen. Bakalar v. Vavra, 619 F.3d 136, 147 39 (2d Cir. 2010) (citing Solomon R. Guggenheim Found. v. 40 Lubell, 77 N.Y.2d 311, 321 (1991)). Here, the district 41 court found that the Drawing was not looted by the Nazis. 42 Bakalar, 819 F. Supp. 2d at 298-99. Vavra and Fischer argue 43 that the district court’s finding is clearly erroneous and 44 that the Nazis stole the Drawing. However, Bakalar traced 2 1 the provenance back to Mathilde Lukacs, Grunbaum’s sister- 2 in-law, who sold it to a gallery in 1956. Vavra and 3 Fischer’s hypothesis--that the Nazis stole the Drawing from 4 Grunbaum only to subsequently return or sell it to his 5 Jewish sister-in-law--does not come close to showing that 6 the district court’s finding was clearly erroneous. 7 8 After finding that the Drawing was not stolen by the 9 Nazis, the district court extended its Lubell analysis by 10 requiring Bakalar to show that Lukacs acquired proper title 11 in the Drawing, and found that he could not. Bakalar, 819 12 F. Supp. 2d at 299-302. We do not decide whether Bakalar 13 discharged his burden under Lubell by tracing the provenance 14 back to Lukacs, who was a close relative of Grunbaum (she 15 was sister to Mrs. Grunbaum, who survived Grunbaum before 16 herself being murdered by the Nazis). The point was not 17 pressed by Bakalar, and we affirm instead on the district 18 court’s ruling that the claim against Bakalar is defeated by 19 laches. 20 21 This Court previously recognized that Bakalar could 22 assert a laches defense under New York law. See Bakalar, 23 619 F.3d at 147. In order to prevail on laches, Bakalar had 24 to show that “(1) [Vavra and Fischer] were aware of their 25 claim [to the Drawing], (2) they inexcusably delayed in 26 taking action, and (3) Bakalar was prejudiced as a result.” 27 Bakalar, 819 F. Supp. 2d at 303 (citing Ikelionwu v. United 28 States, 150 F.3d 233, 237 (2d Cir. 1998)). The district 29 court found that Vavra and Fischer’s “ancestors were aware 30 of--or should have been aware of--their potential intestate 31 rights to Grunbaum property,” and that the ancestors “were 32 not diligent in pursuing their claims to the Drawing.” Id. 33 at 305-06. 34 35 Vavra and Fischer contend that the district court 36 committed two errors of law bearing on the laches defense. 37 First, they argue that the court erroneously “imputed 38 knowledge of ‘potential intestate rights’ to [Vavra and 39 Fischer] based upon previous actions or inactions of other 40 family members.” But it was obviously necessary for the 41 court to do just that; the alternative was to reset the 42 clock for each successive generation. See Bakalar, 819 F. 43 Supp. 2d at 303 ("This inquiry focuses not only on efforts 44 by the party to the action, but also on efforts by the 3 1 party's family.") (internal quotation omitted). Second, 2 Vavra and Fischer argue that their families had no legal 3 duty of diligence until they knew of the actual location of 4 the Drawing. They rely on language in Lubell declining to 5 “impose the additional duty of diligence before the true 6 owner has reason to know where its missing chattel is to be 7 found.” 77 N.Y.2d at 320. However, though “[l]ack of 8 diligence in locating the property” is not a consideration 9 for a statute of limitations analysis, it is absolutely 10 relevant “with respect to a laches defense.” SongByrd, Inc. 11 v. Estate of Grossman, 206 F.3d 172, 182 (2d Cir. 2000) 12 (citing Lubell, 77 N.Y.2d at 321). 13 14 Vavra and Fischer’s factual arguments are no more 15 persuasive. Their theories about what their ancestors knew 16 (or didn’t know) are speculative, and we do not have a 17 “‘definite and firm conviction that a mistake has been 18 committed.’” Mobil Shipping & Transp. Co. v. Wonsild Liquid 19 Carriers Ltd., 190 F.3d 64, 67-68 (2d Cir. 1999) (quoting 20 Anderson v. Bessemer City, 470 U.S. 564, 574 (1985)). 21 22 Next, Vavra and Fischer contest whether Bakalar was 23 prejudiced by their ancestors’ delay in pursuing the 24 Drawing. There can be no serious dispute that the deaths of 25 family members--Lukacs and others of her generation, and the 26 next--have deprived Bakalar of key witnesses. See Sanchez 27 v. Trustees of the Univ. of Pa., 2005 WL 94847, *3 (S.D.N.Y. 28 Jan. 18, 2004) (noting that the death of potential witnesses 29 is prejudicial) (citing Solomon R. Guggenheim Found. V. 30 Lubell, 153 A.D.2d 143, 149 (1st Dep’t 1990)). And while a 31 “defendant's vigilance is as much in issue as [a] 32 plaintiff's diligence,” Lubell, 153 A.D.2d at 152, Vavra and 33 Fischer’s speculation has not established clear error in the 34 district court’s finding that Bakalar, a good faith 35 purchaser, was prejudiced by the delay. See Bakalar, 819 F. 36 Supp. 2d at 306-07. 37 38 In sum, there is no clear error in the findings that 39 Vavra and Fischer’s ancestors knew or should have known of a 40 potential claim to the Drawing, that they took no action in 41 pursuing it, and that Bakalar was prejudiced in this 42 litigation as a result of that delay. It was therefore 43 sound to recognize Bakalar’s title on the basis of his 44 laches defense. 4 1 [2] Citing little authority, Vavra and Fischer argue 2 that the district court should have permitted them to 3 supplement the record with additional expert testimony on 4 remand. They misconstrue this Court’s remand instruction 5 that the district court could reopen discovery to mean that 6 it was required to do so. See Bakalar, 619 F.3d at 147 7 (“[W]e vacate the judgment of the district court and remand 8 the case for further proceedings, including, if necessary, a 9 new trial.”) (emphasis added). See also Int’l Star Class 10 Yacht Racing Ass’n v. Tommy Hilfiger U.S.A., Inc., 146 F.3d 11 66, 73 (2d Cir. 1998) (“The decision whether to hear 12 additional evidence on remand is within the sound discretion 13 of the trial court judge.”). The district court granted a 14 six month extension for expert discovery before trial, but 15 Vavra and Fischer failed to meet the revised deadline. See 16 Bakalar v. Vavra, 851 F. Supp. 2d 489, at 491-92 (S.D.N.Y. 17 2011). The district court did not abuse its discretion in 18 abiding by its discovery calendar, especially in light of 19 its generous extension. 20 21 Finding no merit in Vavra and Fischer’s remaining 22 arguments, we hereby AFFIRM the judgment of the district 23 court. 24 25 26 FOR THE COURT: 27 CATHERINE O’HAGAN WOLFE, CLERK 28 5