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Center for Art Law Case Law Updates

The following case selection first appeared in this week's Center for Art Law newsletter:

Reif v. Richard Nagy, 161799/15 (N.Y. App. Div. 2017) Leon Fisher and Milos Vavra, descendants of Holocaust victim Fritz Gr├╝nbaum, have sought for decades the restitution of two watercolors: "Woman in a Black Pinafore" (1911) and "Woman Hiding Her Face" (1912) by Egon Schiele. They reportedly brought a new lawsuit in New York State Court in 2017, based on the newly enacted Holocaust Expropriated Art Recovery Act (HEAR). The descendants are claiming that the former case was settled only on "legal technicalities", while the merits of the argument that the art was looted by the Nazis were not addressed. They now hope that HEAR will persuade the court that there is enough evidence to show that Fritz Grunbaum was a victim of Nazi looting.

Estate of Lisa de Kooning v. COMMISSIONER OF INTERNAL REVENUE (Tax, Feb. 28, 2017) On February 28th, the estate of Lisa de Kooning, daughter of Willem de Kooning, the famous Dutch-American abstract expressionist, filed a petition in U.S. Tax Court after the value of the taxable estate was increased by $231 million in a notice of deficiency. In 2013, a statement of value for the artwork was requested by the IRS's art appraisal division, and the estate submitted an appraisal from Christie's Appraisals pegging the value of the corpus at $231.4 million before any discounts. After consultations with economic professors, the estate proposed a blockage discount of nearly 60% for the paintings and 85% for most of the sculptures. The IRS refused to apply "blockage discounts" to the value of the artwork.

Estate of Eva Franzen Kollsman v. Commissioner of Internal Revenue, No. 26077-09 (US. Tax Court, Feb. 22, 2017) Decedent died in August 2005, leaving a will. Among the estate's assets were two 17th-century paintings by Pieter Brueghel the Younger, though there were some questions concerning the attribution of one painting to Pieter Brueghel the Elder. George Wachter, vice president of Sotheby's North America and South America, sent the executor a fair market value estimate and a consignment of rights agreement. The estate filed a Form 706, United States Estate Tax Return, reporting the fair market values, as of the valuation date of respectively $500,000 for one work and $100,000 for the other. The Commissioner of Internal Revenue assigned a different value to the paintings, and a notice of deficiency to determine the fair market values was issued. During redetermination, the court rejected Wachter's valuation and its related arguments: the bad condition of the paintings, the change in market demand, and the uncertainty of the attribution. Instead, the court took into account the valuation of Respondent's expert to fix the amount of the fair market values with some adjustments (respectively: $1,995,000 and $375,000) that now have to be declared and paid.

Petrella v. MGM, 10-55834, 10-55853 (9th Circuit, 22 Aug. 2014) On remand from the Supreme Court, the Ninth Circuit court rejected MGM's argument that the license it obtained for the book based on the life of boxer Jake LaMotta and 1973 screenplay on the same subject entitled it to a grant of summary judgment of non-infringement, and remanded the case back to the district court. Plaintiff Petrella sued MGM in 2009 for copyright infringement by the film Raging Bull of a 1963 screenplay written by her father. She renewed the copyright in the 1963 screenplay but not in a book or a 1973 screenplay. One of the issues the Ninth Circuit dealt with was whether the book MGM had licensed for Raging Bull was a derivative work of the 1963 screenplay, or vice versa. The Ninth Circuit also directed the lower court to determine whether plaintiff was estopped from arguing that the book MGM licensed was a derivative work of the 1963 screenplay.

Fertitta, III et al v. Knoedler Gallery, LLC et al, 1:2014cv02259 (S.D.N.Y, 29 Jan. 2015) In January 2017, District Court Judge Paul Oetken refused to dismiss allegations of entrepreneur Frank Fertitta against art historian Oliver Wick, a Rothko expert, and two other defendants in the case tied to the December 2011 demise of the renowned Knoedler Gallery of serial allegations for forgeries. Plaintiff Fertitta bought one of the alleged fake Rothko paintings at the Knoedler Gallery. The Judge upheld the following causes of action: Rescission, breach of warranty, and indemnification counts against the art historian Wick. Wick's lawyer argued that the Rothko expert reasonably believed the work was genuine. Urs Kraft, whom Plaintiff alleges coordinated the sale on behalf of an nonexistent mysterious "Mr. X", also faces breach of warranty, breach of contract, fraud, fraudulent concealment, aiding and abetting fraud in the ruling. In addition, ex-Knoedler employee Jaime Andrades faces the heaviest charges, including violating the federal anti-racketeering law and a RICO conspiracy charges.

Allbritton et al. v. United States, 4:15-cv-00275 (S.D.Tex., 30 Jan. 2015, settled Sept. 2016) The widow of Texas Tycoon Joe L. Allbritton sued the United States for herself and the estate of her husband in the Southern District Court of Texas for the IRS to tax the tycoon $40.6 million on the belief that he had taken ownership of a treasure trove of art including works by Picasso, Monet, and van Gogh. In her Complaint, Allbritton asserts that that IRS's math is based on a false belief that the family's holding corporation distributed artwork and antiquities worth $139 million to late Joe Allbritton in 2005, and that it also paid the Allbrittons $364,000 to insure the art from 2005 to 2008; payments that contribute "taxable dividends." Ms. Allbritton asserts in her Complaint that the company never transferred ownership of the art to her husband in 2005, and sued the IRS for a full refund of $40.6 million. On Sept. 30, 2016, it was announced that Allbritton's estates and the IRS reached a settlement.

Green v. Nat'l Gallery of Art, London, 1:16-cv-06978 (S.D.N.Y. Sep. 7, 2016) The purported heirs to a Matisse painting, "Portrait of Greta Moll" (1908), are suing the National Gallery of Art, London, for its possession and $30 million in damages. Greta Moll's relatives allege that the painting was lost during the Allies' occupation of Germany and, therefore, its acquisition violates international law. The defendants argue that (1) they performed their due diligence in purchasing the painting in 1979, and (2) because the Allied occupation of Germany came after the fall of the Third Reich and end of World War II, the painting is not protected by the international laws on which the plaintiffs rely.

Beck v. Christie's, 141 A.D.3d 442 (N.Y. App. Div., July 7, 2016) This case is related to a Degas drawing, "Danseuses." Plaintiffs seek an injunction and tremble damages against the auction house for allegedly violating the NY Gen. Bus. Law and engaging in "Deceptive Acts" during its November 3, 2009 sale on behalf of an undisclosed private seller. Nazis illegally confiscated the Kainers' substantial art collection, and the heirs only obtained a French inheritance certificate only in May 2012. New York courts have applied CPLR 214 (2)'s three-year period of limitations for statutory causes of action. Christie's asserted that the alleged injury occurred at the time of the sale, more than five years before the filing of the action by the heirs. The action was dismissed based on the statute of limitations.

Klinger v. Conan Doyle Estate Ltd., 14-1128 (7th Cir., 4 Aug. 2014) A plaintiff who brought a declaratory judgment for anthologizing modern authors' stories about Sherlock Holmes after the estate of Arthur Conan Doyle threatened to work with Amazon and other booksellers to block sales of the anthology unless a license was obtained, was awarded $30,000 in attorneys' fees he spent on the appeal at the Seventh Circuit. The court called the estate's approach to encourage payment of a license fee by employing booksellers to boycott the plaintiff anthology "a form of extortion", and stated that it could be considered a violation of the antitrust laws.

The Center for Art Law strives to create a coherent community for all those interested in law and the arts. Positioned as a centralized resource for art and cultural heritage law, it serves as a portal to connect artists and students, academics and legal practitioners, collectors and dealers, government officials and others in the field. In addition to the weekly newsletter (http://cardozo.us2.list-manage.com/subscribe?u=78692bfa901c588ea1fe5e801&id=022731d685), the Center for Art Law subscribers receive updates about art and law-related topics through its popular art law blog (http://itsartlaw.com/blog/)and calendar of events (http://itsartlaw.com/events/). The Center for Art Law welcomes inquiries and announcements from firms, universities and student organizations about recent publications, pending cases, upcoming events, current research and job and externship opportunities. To contact the Center for Art Law, visit our website at: www.itsartlaw.com or write to itsartlaw@gmail.com.

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This page contains a single entry from the blog posted on April 2, 2017 10:43 PM.

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