United States Court of Appeals
For the First Circuit
No. 09-1922
MUSEUM OF FINE ARTS, BOSTON,
Plaintiff, Appellee,
v.
CLAUDIA SEGER-THOMSCHITZ,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Torruella and Lipez, Circuit Judges,
and Barbadoro,* District Judge.
Thomas J. Hamilton, with whom J. Owen Todd, David H. Rich, and
Todd & Weld LLP were on brief, for appellant.
Simon J. Frankel, with whom Theodore P. Metzler, Covington &
Burling LLP, Robert J. Muldoon, Jr., Thomas Paul Gorman, and Sherin
& Lodgen LLP were on brief, for appellee.
October 14, 2010
*
Of the District of New Hampshire, sitting by designation.
LIPEZ, Circuit Judge. Claudia Seger-Thomschitz, the sole
surviving heir of Austrian-Jewish art collector Oskar Reichel,
seeks to recover possession of Oskar Kokoschka's Two Nudes (Lovers)
("the Painting"), a valuable oil painting formerly owned by Reichel
and now held by the Museum of Fine Arts, Boston ("the MFA").
Seger-Thomschitz alleges that Reichel was forced to sell the
Painting under duress after Austria was annexed by Nazi Germany in
1938 and that good title never passed to the original purchaser or
to the MFA. The MFA counters that the original transaction was
valid and that Seger-Thomschitz's claim to the Painting is time-
barred in any event.
After private negotiations between Seger-Thomschitz and
the MFA proved fruitless, the MFA commenced this action for a
declaratory judgment to "confirm its rightful ownership of the
painting." The district court granted summary judgment for the MFA
on statute of limitations grounds, holding that Seger-Thomschitz's
claims were time-barred. Having carefully reviewed the record, we
now affirm that statute of limitations ruling.
I.
Oskar Reichel was a successful physician and art
collector in Vienna during the first decades of the twentieth
century. Before World War I, Dr. Reichel came to know Oskar
Kokoschka, the celebrated Austrian expressionist, and became an
early patron and collector of Kokoschka's work. Dr. Reichel
-2-
acquired a number of Kokoschka paintings during that period,
including Two Nudes (Lovers), which he purchased from Kokoschka in
1914 or 1915. The Painting is a self-portrait of the artist in an
embrace with Viennese socialite (and widow of composer Gustav
Mahler) Alma Mahler, with whom Kokoschka was having a tempestuous
affair at the time. The MFA describes the Painting as "large and
striking," measuring more than three feet wide and five feet tall.
During the interwar period, Dr. Reichel lent the Painting
on three occasions to Otto Kallir,1 the proprietor of the Neue
Gallery in Vienna, for display and possible sale. Dr. Reichel and
Kallir agreed to a sale price for the Painting on at least two of
those occasions: $1,800 U.S. dollars (gross) in 1924 and 4,000
Austrian schillings (net to Dr. Reichel) in 1933.2 Although Dr.
Reichel was able to sell six of his eleven Kokoschka works between
the wars, he never sold the Painting, which remained in his
possession until 1939 along with four other Kokoschka works.
Conditions for Dr. Reichel and other Austrian Jews
rapidly deteriorated following the Anschluss –- the annexation of
Austria by the Third Reich in March 1938. Pursuant to Nazi
regulations, Dr. Reichel was forced to file a declaration in June
1
At the time, Kallir was known professionally as Otto
Nirenstein or Otto Kallir-Nirenstein. He legally changed his name
to Kallir in 1933.
2
The parties have not attempted to convert the various
currencies noted in the opinion to present day dollars. We simply
report the sums as they appear in the record.
-3-
1938 listing all of the valuable property he owned. One expert
witness described the declaration as a "prelude to the formal Nazi
confiscation and seizure of all Jewish-owned property in Austria
and Germany." Proceeds from the sale of declared property had to
be deposited into a Nazi-controlled account and could be withdrawn
only in limited amounts. In his 1938 property declaration, Dr.
Reichel stated that he owned the Painting and four other Kokoschka
works. He declared the combined value of the Painting and another
work to be 250 Reichsmark.
Around the same time, Kallir, who was also Jewish,
transferred ownership of his gallery to his non-Jewish secretary
and moved to Paris. While Kallir was in Paris, Dr. Reichel agreed
to transfer his remaining five Kokoschka works, including the
Painting, to Kallir. The details of this transaction are sketchy.
It is not clear whether Dr. Reichel received any consideration for
the works at the time. Two contemporaneous notes indicate that
Kallir agreed to purchase the five paintings for a total of 800
Swiss francs. However, Dr. Reichel's son Raimund later said that
his father arranged for Kallir to send the proceeds of the
transaction to another son, Hans, who had already immigrated to the
United States. According to Raimund, Kallir sent Hans $250 for the
five paintings in 1940 or 1941, and Hans forwarded half that sum to
Raimund. The five Kokoschkas, including the Painting, were
-4-
transferred from Dr. Reichel to a shipping company in Vienna, then
exported to Paris.
Dr. Reichel and his wife Malvine suffered at the hands of
the Nazis. They were forced to close the business Dr. Reichel had
founded and to give up their family home and another property.
Their eldest son was deported to Lodz, Poland, where he was killed.
Malvine was sent to the Theresienstadt concentration camp in 1943,
and Dr. Reichel died of natural causes that same year. The two
younger sons had emigrated by that time -- Hans to the United
States and Raimund to Argentina. Malvine survived the war and
eventually joined Hans in the United States.
Meanwhile, Kallir had settled in New York, where he
opened the Galerie St. Etienne. He brought the Painting with him
and sold it to the Nierendorf Gallery for $1,500 in 1945. The
Nierendorf Gallery then sold the Painting to the E.A. Silberman
Galleries, which in turn sold the Painting to Sarah Reed Blodgett
in 1947 or 1948. Blodgett kept the painting for many years,
lending it out for exhibitions from time to time. She eventually
bequeathed the Painting to the MFA, which acquired possession in
1973.3 The Painting has been on almost continuous display at the
3
Blodgett bequeathed another Kokoschka painting, Portrait
of a Youth -- which depicts Hans Reichel as a boy -- to her
daughter. Seger-Thomschitz claimed ownership of that painting as
well, but the U.S. District Court for the Eastern District of
Louisiana found that Blodgett's daughter had acquired title through
acquisitive prescription (a civil law doctrine analogous to adverse
possession) and that Seger-Thomschitz's claims were time-barred in
-5-
MFA since then, though it has been loaned out many times for
exhibitions in the United States and around the world.
Raimund moved back to Vienna in 1982. He executed a will
in 1989, in which he designated Seger-Thomschitz as his sole heir.
It is not clear how Raimund and Seger-Thomschitz knew each other.
She is described in one document as his "select-niece," but they
are not blood relatives. When Raimund died in 1997, Seger-
Thomschitz became the sole surviving heir of Dr. Reichel.4
Seger-Thomschitz says that she "first learned that the
Nazis confiscated artworks from Oskar Reichel in the Fall of 2003
when the Museums of Vienna contacted her concerning their intent to
return to her as the sole heir of Oskar Reichel four artworks in
their collection by the artist Anton Romako . . . ." The
restitution of the Romako works was pursuant to a municipal
resolution that Vienna had passed in 1999, which in turn
implemented a 1998 national art restitution law. One municipal
document notes that "it seemed quite proper" to return the works to
Seger-Thomschitz because Dr. Reichel "had to sell [them] due to his
persecution as a Jew." Notably, Dr. Reichel appears to have sold
any event. See Dunbar v. Seger-Thomschitz, 638 F. Supp. 2d 659,
663-64 (E.D. La. 2009). The Fifth Circuit recently affirmed that
decision. See Dunbar v. Seger-Thomschitz, No. 09-30717, 2010 WL
3292678 (5th Cir. Aug. 20, 2010).
4
Hans died in 1979. His will designated Raimund as his
sole heir.
-6-
the Romako works around the same time that he sold the Painting,
and under similar circumstances. He sold three of the four Romakos
to the Neue Gallery in 1939 "for only small equivalent amounts,"
and he sold the fourth to the Neue Gallery in 1942. The gallery,
by then under the direction of Otto Kallir's former secretary,
subsequently sold the Romakos to the city.
Following her correspondence with the Museums of Vienna,
Seger-Thomschitz retained a Viennese attorney, Erich Unterer -- who
had also been Raimund Reichel's attorney -- "for purposes of
handling the restitution of any artworks that Oskar Reichel may
have lost due to Nazi persecution." Seger-Thomschitz and Unterer
initially thought that all of the artwork Dr. Reichel lost during
the Nazi era had been returned. In 2006, however, an American
attorney "began a colloquy" with Seger-Thomschitz and alerted her
to the possibility that other works formerly owned by Dr. Reichel
might be located outside Austria. Seger-Thomschitz retained the
attorney, whose firm then sent a letter to the MFA on March 12,
2007, demanding the return of the Painting.
When confronted with Seger-Thomschitz's claim to the
Painting, the MFA undertook "an exhaustive effort to research and
document the provenance of the Painting in order to ascertain
whether the claim . . . appeared valid or not." An MFA curator and
an independent provenance researcher spent eighteen months
researching the Painting's history, during which time they visited
-7-
approximately ten museums and governmental archives around the
world and corresponded with numerous other museums and archives.
Based on that research, the MFA concluded that the original
transfer of the Painting from Dr. Reichel to Kallir was valid and
that it would retain the Painting in its collection. It commenced
an action against Seger-Thomschitz in the United States District
Court for the District of Massachusetts on January 22, 2008,
seeking a declaratory judgment to "confirm its rightful ownership
of the painting." Seger-Thomschitz answered the complaint in May
of that same year and asserted counterclaims for conversion,
replevin, and other state law causes of action.
In September 2008, the MFA filed a motion for summary
judgment arguing that all of Seger-Thomschitz's counterclaims were
time-barred as a matter of law. Seger-Thomschitz opposed the
motion for summary judgment and also filed a motion to amend her
answer to add a theory of fraudulent concealment (which might have
extended the limitations period, see Mass. Gen. Laws ch. 260, § 12)
and an accompanying affidavit requesting the postponement of
summary judgment proceedings so that she could have extra time to
conduct discovery on the fraudulent concealment theory, see Fed. R.
Civ. P. 56(f).
The district court granted the motion for summary
judgment and denied the motion to amend. See Museum of Fine Arts,
Boston v. Seger-Thomschitz, No. 08-10097, 2009 WL 6506658 (D. Mass.
-8-
June 12, 2009). Applying the three-year Massachusetts statute of
limitations applicable to tort and replevin actions, Mass. Gen.
Laws ch. 260, § 2A, the district court held that the causes of
action against the MFA accrued when the Reichel family and/or
Seger-Thomschitz discovered or should reasonably have discovered
the basis for their claims to the Painting. Museum of Fine Arts,
2009 WL 6506658 at *7. It then addressed both the Reichel family's
knowledge and Seger-Thomschitz's knowledge, concluding that all
parties should have known about the basis for their claims more
than three years before Seger-Thomschitz made her demand on the MFA
through her attorney's letter. It also denied the motion to amend.
Judgment was entered in favor of the MFA,5 and this appeal
followed.
II.
Only a narrow range of issues is presented on appeal.
Because the district court proceedings ended with summary judgment
on statute of limitations grounds, we are not asked to judge the
validity of the original transfer of the Painting from Dr. Reichel
to Kallir. On this record, given the passage of time, the validity
of the transfer "is not clear-cut."6 See id. at *6. The question
5
The judgment reads, in relevant part: "IT IS ORDERED AND
ADJUDGED that Defendant Dr. Claudia Seger-Thomschitz does not have
a valid claim to the painting Two Nudes (Lovers) by Oskar Kokoschka
because any claim by defendant to that painting is time-barred."
6
One commentator explains that "[s]orting the legitimate
transaction from the illegitimate sixty or seventy years later can
-9-
we face, however, is whether Seger-Thomschitz's counterclaims,
meritorious or not, are time-barred as a matter of law.
The limitations question, in turn, has generated two
separate strands of argument in this litigation. The dominant
strand in the district court proceedings, and the one the MFA now
focuses on, concerns the accrual of Seger-Thomschitz's causes of
action under Massachusetts law. The district court held that the
claims accrued "decades before the filing of this lawsuit," and in
any event no later than the fall of 2003, when Seger-Thomschitz was
apprised of Vienna's decision to return the Romako works. Museum
be extremely difficult":
Much art was Aryanized, or subjected to forced sales for
prices significantly below market value (if any value
ever actually materialized for the seller), and some art
was sold at infamous "Jew auctions," which are now
universally recognized as illegal. But some sales before
April 26, 1938, were legitimate and for fair market value
or close thereto. Some people were able to voluntarily
sell art on the open market, albeit not much modern art
after Hitler declared it "degenerate". Additionally,
because so many Jews were compelled to forfeit "flight
asset[s]" to pay for their passage out of the Reich, the
European art market reflected depressed prices.
Jennifer Anglim Kreder, The New Battleground of Museum Ethics and
Holocaust-Era Claims: Technicalities Trumping Justice or
Responsible Stewardship for the Public Trust?, 88 Or. L. Rev. 37,
49-50 (2009). Cf. Schoeps v. Museum of Modern Art, 594 F. Supp. 2d
461, 466 (S.D.N.Y. 2009) (holding, on facts similar to those
presented here, that a triable issue existed as to whether the
original transfer was voluntary under German law); Bakalar v.
Vavra, No. 08-5119, 2010 WL 3435375, at *10-15 (2d Cir. Sept. 2,
2010) (Korman, J., separately concurring) (discussing some of the
relevant legal considerations under New York law).
-10-
of Fine Arts, 2009 WL 6506658, at *8-9. Seger-Thomschitz argues
that there is a triable issue as to when she and/or the Reichels
were on notice of the basis for the claims, and she complains that
the district court should have allowed her more time to conduct
discovery. She also contends that even if the district court
correctly applied the Massachusetts discovery rule, the
circumstances of this case justify displacing the Massachusetts
limitations period with a federal common law laches defense. We
address each of these arguments in turn.
A. Massachusetts Discovery Rule
The district court and the parties have limited the
breadth of the statute of limitations inquiry in three important
ways. First, the district court held that the law of
Massachusetts, rather than the law of Austria, New York, or some
other jurisdiction, governs both the merits of Seger-Thomschitz's
counterclaims and the limitations period applicable to those
claims. The parties do not contest that determination on appeal.
Second, the district court held that, under Massachusetts law,
Seger-Thomschitz's counterclaims are governed by the three-year
limitations period applicable to tort and replevin actions, Mass.
Gen. Laws ch. 260, § 2A. Although Seger-Thomschitz argued below
that the six-year period applicable to contract claims should
apply, she has abandoned that position on appeal and so has
conceded that the three-year period applies.
-11-
Third, under the applicable statute of limitations,
"actions of tort, actions of contract to recover for personal
injuries, and actions of replevin, shall be commenced only within
three years next after the cause of action accrues." Mass. Gen.
Laws ch. 260, § 2A. The district court analyzed the accrual
question by applying the so-called discovery rule, which provides
that "a cause of action accrues when 'an event or events have
occurred that were reasonably likely to put the plaintiff on notice
that someone may have caused her injury.'" Donovan v. Philip
Morris USA, Inc., 914 N.E.2d 891, 903 (Mass. 2009) (quoting Bowen
v. Eli Lilly & Co., 557 N.E.2d 739, 741 (Mass. 1990)). Although
the discovery rule is not the only possible way of measuring
accrual in a missing art case,7 the parties do not contest the
7
A number of alternative approaches are noted in Ashton
Hawkins et al., A Tale of Two Innocents: Creating an Equitable
Balance Between the Rights of Former Owners and Good Faith
Purchasers of Stolen Art, 64 Fordham L. Rev. 49, 77 & nn. 174-75
(1995), and Steven A. Bibas, Note, The Case Against Statutes of
Limitations for Stolen Art, 103 Yale L.J. 2437, 2440-48 (1994).
They include variations on the doctrine of adverse possession,
rules tying accrual to the date the possessor acquired the
property, and the rule that a cause of action for conversion
against an innocent purchaser does not accrue until there has been
a demand for, and a refusal to surrender, the property. New York
explicitly follows the demand and refusal rule. See Solomon R.
Guggenheim Found. v. Lubell, 569 N.E.2d 426, 429 (N.Y. 1991). The
case law suggests that such a rule could potentially be applied in
Massachusetts as well. See Atl. Fin. Corp. v. Galvam, 39 N.E.2d
951, 952 (Mass. 1942); In re Halmar Distribs., Inc., 968 F.2d 121,
129 (1st Cir. 1992); see also W. Page Keeton et al., Prosser and
Keeton on Torts 93-94 (5th ed. 1984). Because Seger-Thomschitz's
concession removes these issues from our consideration, we do not
express any opinion on them.
-12-
district court's decision to apply it here. We therefore follow
the district court's lead in applying the discovery rule to Seger-
Thomschitz's counterclaims.
The party seeking the benefit of the discovery rule has
the burden of showing (1) that she lacked actual knowledge of the
basis for her claim and (2) that her lack of knowledge was
objectively reasonable. Koe v. Mercer, 876 N.E.2d 831, 836 (Mass.
2007). Courts applying the discovery rule in missing art cases
have tested the reasonableness of the claimant's lack of knowledge
by asking whether the claimant "acted with due diligence in
pursuing his or her personal property." O'Keeffe v. Snyder, 416
A.2d 862, 872 (N.J. 1980); accord Autocephalous Greek-Orthodox
Church v. Goldberg & Feldman Fine Arts, Inc., 917 F.2d 278, 288-89
(7th Cir. 1990); Erisoty v. Rizik, No. 93-6215, 1995 WL 91406, at
*10 (E.D. Pa. Feb. 23, 1995).
In contrast to many missing art cases, the location of
the Painting has been no secret in this case. The Painting has
long been on public display at the MFA, a major international
museum. Since 2000, the MFA has listed the Painting in a
provenance database on its publicly accessible website. Several
published books and at least one catalogue raisonné of Kokoschka's
works8 identify the MFA as the current holder of the Painting.
8
As the district court explained, a catalogue raisonné is
a comprehensive scholarly listing of an artist's works. Museum of
Fine Arts, 2009 WL 6506658, at *2 n.4.
-13-
Finally, the Getty Provenance Index, a database of provenance
information that has been searchable on the internet since 1999,
notes that the Painting is part of the MFA's collection. There is
no question that the MFA's possession of the Painting has long been
discoverable with minimal diligence.
Then there is the question of when the Reichel family
should have known that Dr. Reichel formerly owned the Painting and
gave it up under conditions that may have amounted to duress. The
district court held that Hans, Raimund, and Malvine Reichel "had
ample notice of any possible claim to the Painting decades before
the filing of this lawsuit." Museum of Fine Arts, 2009 WL 6506658,
at *8. Among other things, the district court noted that Raimund
wrote several letters to art historians during the 1980s in which
he indicated that he remembered the Painting and knew the details
of its transfer to Kallir. See id. at *7-8. That knowledge, plus
the fact that the Reichel family sought compensation for some
artworks but not the Painting, led the district court to conclude
that the family's failure to lay claim to the Painting was not due
to ignorance about the availability of restitution. Id. at *7, 8
n.11.
There is also the separate question of Seger-Thomschitz’s
knowledge of the Painting, an issue somewhat obscured by her motion
to amend her counterclaim. She sought leave to amend while the
motion for summary judgment was pending in the district court,
-14-
alleging that Kallir fraudulently concealed the details of Dr.
Reichel's sale of the Painting from the Reichel family. She also
filed an affidavit in accordance with Federal Rule of Civil
Procedure 56(f) asking for additional time to conduct discovery on
the fraudulent concealment theory. The district court denied the
motion, concluding that summary judgment was warranted even if the
allegations of fraudulent concealment were true. See Museum of
Fine Arts, 2009 WL 6506658, at *9-10.
As Seger-Thomschitz acknowledged at oral argument, there
is no allegation that Kallir fraudulently concealed anything from
her. Hence the fraudulent concealment claim does not affect the
knowledge of Seger-Thomschitz herself, which the district court
cited as an alternative basis for granting summary judgment. We
focus our analysis on that ruling.
By her own admission, Seger-Thomschitz "learned that the
Nazis had confiscated artworks from Oskar Reichel in the Fall of
2003 when the Museums of Vienna contacted her concerning their
intent to return to her as the sole heir of Oskar Reichel four
artworks in their collection by the artist Anton Romako." That
information put her on notice that she might have a claim to other
artworks that were previously owned by Dr. Reichel. She retained
a Viennese attorney that same year "for purposes of handling the
restitution of any artworks that Oskar Reichel may have lost due to
Nazi persecution." Yet she did not demand the return of the
-15-
Painting from the MFA until March 12, 2007, well over three years
after she was contacted about the Romakos.
As we have already noted, and as the district court
explained more fully, provenance information for the Painting,
including the fact of Dr. Reichel's prior ownership, was available
on the MFA's website, in the Getty Provenance Index, in several
catalogues raisonnés of Kokoschka's works, and in a book published
in Vienna in 2003 that "included a picture of the Painting, traced
its provenance from Reichel to the MFA, included a transcription of
Reichel's April 1938 property declaration listing the Painting[,]
and described the sale of the work to Kallir and its subsequent
exhibition in the United States at the Galerie St. Etienne."
Museum of Fine Arts, 2009 WL 6506658, at *9. In addition, Dr.
Reichel's property declaration has been directly accessible to the
public since 1998. Although the availability of some of these
sources may not have been obvious to Seger-Thomschitz, who is a
nurse with no specialized training in Nazi-era art claims, that
fact does not excuse her delay. It was her burden under
Massachusetts law to discover from the relevant professional
communities whether she had a cognizable legal claim. Doe v.
Harbor Sch., Inc., 843 N.E.2d 1058, 1067 n.13 (Mass. 2006).
Indeed, she had an attorney available to her in 2003 who could have
helped her discover the basis for her claim.
-16-
Seger-Thomschitz argues that "because the discovery rule
is fact intensive, juries -- rather than the court -- should decide
when plaintiffs knew or should have been aware of their claims."
That argument does not get her far. The issue of what a party knew
or should have known is often a question of fact to be submitted to
the jury. Mercer, 876 N.E.2d at 836. However, summary judgment
may be granted on a limitations defense if there is no genuine
dispute about the material facts, and the record evidence would not
permit a reasonable jury to return a verdict for the nonmoving
party. See Genereux v. Am. Beryllia Corp., 577 F.3d 350, 361 (1st
Cir. 2009); Doyle v. Shubs, 905 F.2d 1, 1 (1st Cir. 1990) (per
curiam). Cf. Mercer, 876 N.E.2d at 836 (applying a similar
standard under Massachusetts Rule of Civil Procedure). That is the
case here.
Seger-Thomschitz did not submit her own affidavit to
explain what she was doing between 2003 and 2007, a curious
omission given that she is in the best position to account for that
period. Her American attorney, whom she retained in 2006,
submitted an affidavit in connection with her Rule 56(f) request in
which he stated that Seger-Thomschitz and her Austrian attorney
"had come to believe that all of the artwork that Oskar Reichel
lost due to Nazi persecution had remained in Vienna and had been
restituted." Of course, in light of all the publicly available
information about the provenance of the Painting, a mistake of that
-17-
sort does not delay the commencement of the limitations period.
Any reasonable jury confronted with the summary judgment record
would conclude that Seger-Thomschitz's causes of action accrued no
later than the fall of 2003, when she learned that the Nazis had
confiscated artworks from Dr. Reichel, and could then, with
reasonable diligence, have discovered her claim to the Painting.
Because she did not make a demand on the MFA until March 12, 2007,
more than three years after her causes of action accrued, summary
judgment was properly granted on the MFA's limitations defense.
B. Federal Preemption
Seger-Thomschitz argues in the alternative that the
Massachusetts statute of limitations should not be applied at all.
She contends that her case implicates important federal interests,
and so should be governed by federal timeliness principles based in
equity rather than the more rigid Massachusetts limitations period.
1. MFA's Tax-Exempt Status
In the district court and in her opening brief on appeal,
Seger-Thomschitz focused much of her preemption argument on the
MFA's status as a tax-exempt organization under section 501(c)(3)
of the Internal Revenue Code, 26 U.S.C. § 501(c)(3). She argues
that the application of a state limitations period in this case
would frustrate the "many discrete and compelling federal interests
that inhere when judicial claims to recover Nazi-confiscated
artworks are brought against U.S. tax-exempt public trustees such
-18-
as the MFA." In lieu of the Massachusetts limitations period, she
would have us apply the more flexible doctrine of laches as a
matter of federal common law, thereby placing the burden on the MFA
to prove the lack of diligence of a claimant such as Seger-
Thomschitz and the prejudice experienced by the MFA because of
Seger-Thomschitz's delay in asserting her claims.9 The logic of
her position would entail displacing state limitations periods in
favor of a federal laches rule whenever a claim for restitution of
a Nazi-era artwork was made against a tax-exempt organization.
The Supreme Court has warned that the judiciary should
create special federal common law rules in "few and restricted"
cases. O'Melveny & Myers v. FDIC, 512 U.S. 79, 87 (1994) (internal
citations and quotation marks omitted). "'Whether latent federal
power should be exercised to displace state law is primarily a
decision for Congress,' not the federal courts." Atherton v. FDIC,
519 U.S. 213, 218 (1997) (quoting Wallis v. Pan Am. Petroleum
Corp., 384 U.S. 63, 68 (1966)). To justify the application of a
federal common law rule, the proponent must typically show that
there is a "significant conflict between some federal policy or
interest and the use of state law." Id. (internal quotation marks
omitted).
9
"Laches requires proof of (1) lack of diligence by the
party against whom the defense is asserted, and (2) prejudice to
the party asserting the defense." Costello v. United States, 365
U.S. 265, 282 (1961).
-19-
Seger-Thomschitz contends that the federal government has
a compelling interest in "ensuring that charitable organizations
that operate as tax exempt entities provide the public with the
benefits for which their tax exemptions were granted." Tax-exempt
museums, in her view, have "undermine[d] the rationale for their
tax exemptions" by consistently failing to investigate the
provenance of the artworks they acquire, thereby facilitating
commerce in stolen artworks and other contraband. Without further
elaboration, she concludes, "Federal courts therefore are empowered
to formulate appropriate rules of accrual in lawsuits seeking to
reclaim Nazi-confiscated artworks in the possession of U.S. tax-
exempt museums that will encourage these museums to operate
lawfully."
On this record, Seger-Thomschitz's argument asks too much
of the federal courts and the federal tax code. Tax-exempt
organizations, no less than non-exempt organizations, are already
subject to applicable state law. See, e.g., Abramian v. President
& Fellows of Harvard Coll., 731 N.E.2d 1075 (Mass. 2000) (upholding
judgment against tax-exempt university under state employment law).
Indeed, as the MFA notes, its trustees are subject to common law
fiduciary duties relevant to the accusations of wrongdoing that
Seger-Thomschitz has made in this case. The principal
distinguishing characteristic of a section 501(c)(3) organization
is that, by "legislative grace," it is not required to pay federal
-20-
taxes on its income.10 IHC Health Plans, Inc. v. Comm'r, 325 F.3d
1188, 1193-94 (10th Cir. 2003) (internal quotation marks omitted).
Although 501(c)(3) status is conditioned on the
organization's adherence to certain federally prescribed standards,
see Bob Jones Univ. v. United States, 461 U.S. 574, 592 (1983),
these standards do not justify a free-ranging superintendence by
the federal courts. If a 501(c)(3) organization fails to meet its
obligations under the tax code, the law provides a remedy: the
organization's tax-exempt status can be revoked. See Rev. Proc.
2010-9, 2010-2 I.R.B. 258; Branch Ministries v. Rossotti, 211 F.3d
137, 141-42 (D.C. Cir. 2000). In addition, egregious abusers of
section 501(c)(3) may be subject to civil or criminal penalties.
See, e.g., United States v. Fumo, 628 F. Supp. 2d 573, 593-95 (E.D.
Pa. 2007). The federal interest in ensuring that tax-exempt
organizations "demonstrably serve and be in harmony with the public
interest," Bob Jones Univ., 461 U.S. at 592, is adequately
protected through these mechanisms and others. We perceive no need
to create additional federal common law rules to punish and deter
bad behavior by tax-exempt organizations, as Seger-Thomschitz
proposes.
In sum, Seger-Thomschitz has not shown that application
of the Massachusetts statute of limitations to the Massachusetts
10
An important collateral benefit is that donations to a
501(c)(3) organization are tax-deductible. See Bob Jones Univ. v.
Simon, 416 U.S. 725, 727-28 (1974).
-21-
causes of action in this case would cause a "significant conflict
with, or threat to," the federal interests and policies embodied in
section 501(c)(3). Atherton, 519 U.S. at 225. We therefore
decline her invitation to replace, on that basis, the Massachusetts
limitations period with a federal common law laches defense.
2. Foreign Affairs Preemption
Seger-Thomschitz also argues that the Massachusetts
statute of limitations should be set aside because it conflicts
with the federal government's foreign policy.11 She grounds her
argument in a federal statute and several international
declarations signed by the executive branch that touch on the
subject of Nazi-confiscated art. She correctly recognizes that the
statute and the declarations are merely hortatory, and so do not
create any substantive legal rules capable of directly preempting
state law. See Hawaii v. Office of Hawaiian Affairs, 129 S. Ct.
1436, 1443 (2009). Nevertheless, she argues that they constitute
evidence of a federal policy disfavoring the application of rigid
limitations periods to claims for Nazi-looted artwork. That
federal policy, she contends, is itself capable of preempting the
Massachusetts statute of limitations.
11
The MFA contends that Seger-Thomschitz's foreign affairs
preemption argument is forfeited because it was raised for the
first time in her reply brief. That is not correct. Seger-
Thomschitz specifically argued for foreign affairs preemption in
her opening brief. She then developed that argument further in her
reply brief. There was no forfeiture.
-22-
In support of her argument, Seger-Thomschitz relies on
American Insurance Association v. Garamendi, 539 U.S. 396 (2003).
The Supreme Court held in Garamendi that "state law must give way"
when it is in "clear conflict" with an "express federal policy" in
the foreign affairs context. 539 U.S. at 421, 425. At issue was
California's Holocaust Victim Insurance Relief Act (HVIRA), a law
that required insurance companies doing business in the state to
disclose information about policies sold in Europe during the Nazi
era. Id. at 401. A group of insurers challenged the law on the
ground that it interfered with the President's policy, expressed in
executive agreements and statements by executive branch officials,
encouraging voluntary settlement of Nazi-era insurance claims
through the auspices of the International Commission on Holocaust
Era Insurance Claims. Id. at 413, 421. The Supreme Court agreed,
concluding that California's aggressive disclosure requirements
were an "obstacle to the success of the National Government's
chosen 'calibration of force' in dealing with the Europeans using
a voluntary approach." Id. at 425 (citation omitted). The Court
held that the "clear conflict" between the state statute and an
"express federal policy" was sufficient to justify preemption. Id.
It added:
If any doubt about the clarity of the conflict
remained, however, it would have to be
resolved in the National Government's favor,
given the weakness of the State's interest,
against the backdrop of traditional state
legislative subject matter, in regulating
-23-
disclosure of European Holocaust-era insurance
policies in the manner of HVIRA.
Id.
We conclude that Garamendi is inapposite for two
reasons.12 First, there is no comparably express federal policy
bearing on the issues in this case. Second, even if there were
such a policy, the Massachusetts statute of limitations would not
be in clear conflict with it.
As evidence of an express federal policy disfavoring the
application of limitations periods to claims for Nazi-looted
artwork, Seger-Thomschitz directs our attention to four sources of
law: the Holocaust Victims Redress Act of 1998, the Washington
Conference Principles on Nazi-Confiscated Art, the Vilnius Forum
Declaration, and the Terezín Declaration on Holocaust Era Assets
and Related Issues.13 The Holocaust Victims Redress Act is a
12
We recognize that the Supreme Court's decision in
Medellín v. Texas, 552 U.S. 491 (2008), may have cast doubt on the
continuing vitality of Garamendi. See, e.g., A. Mark Weisburd,
Medellín, the President's Foreign Affairs Power and Domestic Law,
28 Penn St. Int'l L. Rev. 595, 625 (2010) ("One fairly clear
consequence of Medellín is that the very broad language used in
American Ins. Ass'n v. Garamendi no longer carries weight."
(footnote omitted)). But see In re Assicurazioni Generali, S.P.A.,
592 F.3d 113, 119 n.2 (2d Cir. 2010) (concluding that Medellín is
consistent with a broad understanding of Garamendi); Movsesian v.
Victoria Versicherung AG, 578 F.3d 1052, 1059 (9th Cir. 2009)
(acknowledging Medellín but nonetheless applying Garamendi
broadly). We express no opinion on that issue. Even if the
Garamendi doctrine retains its full force, it does not aid Seger-
Thomschitz in this case.
13
Seger-Thomschitz also relies on what she characterizes as
"statements of high ranking U.S. officials." However, the first
-24-
federal statute, and the other three documents are executive
agreements -- international declarations signed by the executive
branch on behalf of the United States, but not approved by the
Senate (as treaties) or by the entire Congress (as congressional-
executive agreements).
The four documents are, for the most part, phrased in
general terms evincing no particular hostility toward generally
applicable statutes of limitations. The Holocaust Victims Redress
Act, for example, merely expresses the "sense of the Congress" that
"all governments should undertake good faith efforts to facilitate
the return" of Nazi-confiscated property. Pub. L. No. 105-158, §
202, 112 Stat. 15, 17-18 (1998). Similarly, the Washington
Principles state that when Nazi-confiscated artwork is identified,
"steps should be taken expeditiously to achieve a just and fair
solution, recognizing this may vary according to the facts and
circumstances surrounding a specific case." U.S. Dep't of State,
The Washington Conference on Holocaust Era Assets, Washington
Conference Principles on Nazi-Confiscated Art (Dec. 3, 1998),
statement -- remarks by former Ambassador Stuart Eisenstadt at the
Prague Holocaust Era Assets Conference -- was delivered in the
speaker's personal capacity and so does not represent the position
of the executive branch. The second statement -- remarks by
Ambassador J. Christian Kennedy at the State Department in 2009 --
was stricken from the record for procedural reasons and is not
otherwise publicly available. Neither statement can be used to
support Seger-Thomschitz's preemption argument, and she has not
directed our attention to any other statements of executive branch
policy akin to the official letters and testimony that the Supreme
Court considered in Garamendi.
-25-
http://www.state.gov/www/regions/eur/holocaust/heacappen.pdf. The
Vilnius Forum Declaration "asks all governments to undertake every
reasonable effort to achieve the restitution of cultural assets
looted during the Holocaust" and recognizes that "solutions may
vary according to the differing legal systems among countries and
the circumstances surrounding a specific case." Vilnius
International Forum on Holocaust-Era Looted Cultural Assets,
Vilnius Forum Declaration (Oct. 5, 2000), available at
http://www.lootedartcommission.com/vilnius-forum. We discern no
express federal policy disfavoring statutes of limitations in the
general language of those documents.
The Terezín Declaration is more on point. The parties to
the Declaration stated, in relevant part:
[W]e urge all stakeholders to ensure that
their legal systems or alternative processes,
while taking into account the different legal
traditions, facilitate just and fair solutions
with regard to Nazi-confiscated and looted
art, and to make certain that claims to
recover such art are resolved expeditiously
and based on the facts and merits of the
claims and all the relevant documents
submitted by all parties. Governments should
consider all relevant issues when applying
various legal provisions that may impede the
restitution of art and cultural property, in
order to achieve just and fair solutions, as
well as alternative dispute resolution, where
appropriate under law.
Prague Holocaust Era Assets Conference, Terezín Declaration (June
30, 2009), http://www.holocausteraassets.eu/program/conference-
proceedings/declarations. This statement reflects a clear
-26-
preference that Nazi-era art disputes should be resolved "based on
the facts and the merits" rather than on legal technicalities.
Nevertheless, the language is too general and too hedged to be used
as evidence of an express federal policy disfavoring statutes of
limitations. A preference for the resolution of claims on the
merits does not mean that all time limitations should be abandoned.
Moreover, the Terezín Declaration recognizes that "various legal
provisions that may impede the restitution of art and cultural
property" will continue to be applied. The proposed solution is
for governments applying such provisions to "consider all relevant
issues . . . in order to achieve just and fair solutions." None of
this language is sufficiently clear and definite to constitute
evidence of an express federal policy against the applicability of
state statutes of limitations to claims for the recovery of lost,
stolen, or confiscated art.
Even if there were an express federal policy disfavoring
overly rigid timeliness requirements, the Massachusetts statute of
limitations would not be in "clear conflict" with that policy. The
Supreme Court indicated in Garamendi that it is appropriate to
"consider the strength of the state interest, judged by standards
of traditional practice, when deciding how serious a conflict must
be shown before declaring the state law preempted." 539 U.S. at
420. The enactment of generally applicable statutes of limitations
is a traditional state prerogative, and states have a substantial
-27-
interest in preventing their laws from being used to pursue stale
claims. In that sense, the statute in this case is unlike the law
in Garamendi, which "effectively single[d] out only policies issued
by European companies, in Europe, to European residents, at least
55 years ago." Id. at 425-26 (distinguishing HVIRA from a
"generally applicable 'blue sky' law").
Moreover, as our earlier discussion makes clear, the
Massachusetts statute of limitations, as tempered by the discovery
rule, is flexible and sensitive to the facts of each case. It
strikes a reasonable balance between restitution and repose,
permitting a claimant who has diligently pursued her rights to have
her day in court. Indeed, because a claimant in a missing or
confiscated art case may be able to defeat summary judgment by
demonstrating that she diligently pursued her property, the
Massachusetts discovery rule may not be that different in practice
from the federal common law laches defense that Seger-Thomschitz
would like us to apply. The Massachusetts statute of limitations
is not preempted under Garamendi. Accord Dunbar v.
Seger-Thomschitz, No. 09-30717, 2010 WL 3292678, at *4 (5th Cir.
Aug. 20, 2010) (rejecting a similar argument).
III.
Statute of limitations defenses, even when tempered by a
discovery rule, may preclude otherwise meritorious claims.
Inescapably, statutes of limitations are somewhat arbitrary in
-28-
their choice of a particular time period for asserting a claim.
Yet statutes of limitations cannot be fairly characterized as
technicalities, and they serve important interests:
Statutes of limitations, which are found and
approved in all systems of enlightened
jurisprudence, represent a pervasive
legislative judgment that it is unjust to fail
to put the adversary on notice to defend
within a specified period of time and that the
right to be free of stale claims in time comes
to prevail over the right to prosecute them.
These enactments are statutes of repose; and
although affording plaintiffs what the
legislature deems a reasonable time to present
their claims, they protect defendants and the
courts from having to deal with cases in which
the search for truth may be seriously impaired
by the loss of evidence, whether by death or
disappearance of witnesses, fading memories,
disappearance of documents, or otherwise.
United States v. Kubrick, 444 U.S. 111, 117 (1979) (internal
quotation marks and citations omitted).
Precisely because they do not address the merits of a
claim, statutes of limitations do not vindicate the conduct of
parties who successfully invoke them. Although we make no judgment
about the legality of the MFA's acquisition of the Painting in
1973, we note the MFA's own disclosure that, when confronted with
Seger-Thomschitz's claim, it initiated a provenance investigation
for the Painting that it had not done before. The timing of that
investigation may have been legally inconsequential in this case.
However, for works of art with unmistakable roots in the Holocaust
era, museums would now be well-advised to follow the guidelines of
-29-
the American Association of Museums: "[M]useums should take all
reasonable steps to resolve the Nazi-era provenance status of
objects before acquiring them for their collections -- whether by
purchase, gift, bequest, or exchange." American Association of
Museums, Guidelines Concerning the Unlawful Appropriation of
Objects During the N a zi Era (No v . 1999),
http://www.aam-us.org/museumresources/ethics/nazi_guidelines.cfm .
AFFIRMED.
-30-