Egon Schiele, Portrait of the Artist’s Wife (1917), at the centre of the current dispute.

Just a year before the Spanish flu claimed him in 1918, Austrian Expressionist Egon Schiele used hues of orange and red to portray his wife as she looked away, hands folded (left). Some 20 years later in Nazi-occupied Vienna, this portrait would be looted. And now, over 80 years after that, the work is the subject of a restitution dispute: a case was brought by an American foundation created to advance the late banker Robert Lehman’s vision for the arts (The Robert Owen Lehman Foundation) in the New York courts to assert superior title to the painting. However, following a decision issued at the end of last year, two sets of heirs of separate Holocaust victims can now assert their own, possibly superior, rights to Schiele’s great work (pending the outcome of a recently-filed appeal).[1]

In a decision issued on 23 November 2021, later amended on 3 January 2022, the Honorable J. Scott Odorisi denied motions for summary judgment that, if granted, would have ended the heirs’ case. Finding “material questions of fact” existed and the affirmative defense of laches not applicable, the Court ruled that the foundation would have to proceed against the two sets of heirs vying for the work. The heirs’ respective ancestors are two men who, in early 20^th century Vienna, were in the habit of collecting Schiele’s work: art dealer Karl Mayländer and Dr. Heinrich Rieger, a dentist who often accepted artwork from Schiele as payment for dental care.

For the part of its decision holding that laches would not bar the heirs’ assertions of title, the Court was first required to address the question of which law would be applied to the dispute. On this point, the heirs prevailed. The foundation had argued application of UK law under which the rights of the Mayländer and Rieger heirs could be extinguished based on the six-year time bar of England’s erstwhile Limitation Act 1939. The Court instead chose to apply New York law, citing the state’s “overwhelming interest in preserving the integrity of its market” (Decision at 16, quoting Reif v. Nagy, see below).

The door was then open to an application of the U.S.’s Holocaust Expropriated Art Recovery (“HEAR”) Act of 2016, which the Court noted “promotes restitution to Holocaust victims” (at 16). A key provision of the HEAR Act sets forth that “defense[s] at law relating to the passage of time” should not be allowed to defeat heirs’ claims (at § 5(a)).

Two New York cases (one state, one federal) discussed by the Lehman Court exemplify the conflict that exists over whether the HEAR Act’s reference to ‘defenses at law’ should be read to include the defense of laches, an equitable doctrine that “protects defendants against unreasonable, prejudicial delay in commencing suit” (citing Zuckerman, see below).

Egon Schiele, Woman in a Black Pinafore (1911), one of the works at issue in Reif v. Nagy.

The first of these was Reif v. Nagy, 61 Misc. 3d 319 (N.Y. Sup. Ct. 2018). In 2018, the heirs of Viennese cabaret performer Fritz Grünbaum were found to have a superior right of possession to two works by Schiele that Grünbaum had been forced to part with prior to his murder at Dachau (one of which was ‘Woman in a Black Pinafore’, pictured right). The New York State lower court that heard Reif liberally applied the HEAR Act, highlighting its purpose – to ensure claims for Nazi loot are not dismissed due to stringent evidentiary burdens when only a “fragmentary historical record ravaged by persecution [and] war” is left (HEAR Act at § 2(6)). In 2019, New York’s Appellate Division (an intermediary state appellate court) largely affirmed the lower court’s decision.

The second case cited was Zuckerman v. Metropolitan Museum of Art, 928 F.3d 186 (2^nd Cir. 2019). In an opinion also issued in 2019 but that contrasts with Reif, the Second Circuit federal appellate court upheld laches as a defense against an heir’s claim. The facts involved the sale of Pablo Picasso’s The Actor in late 1930s Europe by a German Jewish couple, the Leffmanns, to non-Nazi buyers. After the war, the Leffmanns did not file a claim for The Actor and, after it passed through various owners, the work was gifted to the Met. When the U.S. Supreme Court was asked to review this decision in 2020, it denied certiorari, leaving the Leffmann heir without further recourse.

Pablo Picasso, The Actor (1904-5), at the centre of the dispute in Zuckerman.

In finding Zuckerman “most closely aligns” with the foundation’s preferred resolution in Lehman, Justice Odorisi noted the Zuckerman Court’s admonition that each case is dependent on its own facts and in other cases laches might “not impede recovery for claims brought pursuant to the HEAR Act” (at 22, 17).  The Lehman Court found the facts before it constituted just such a case. Despite “some similarities” with Zuckerman, the Court found “a notable and significant difference”: the pre-war owners of The Actor (the Leffmans) survived the war while Mayländer and Rieger both perished, leaving their heirs with the almost impossible task of locating and reconstituting their collections (at 22). “As the Court observed in Reif, it would be ‘absurd’ to allow the laches defense to defeat the claims of the Mayländer Heirs and Rieger Heirs” (at 25).

While the contradictory evidence presented by the parties has established the necessity for a trier-of-fact in this case, a trial is not projected for the near future. The foundation has appealed the lower court’s decision to the New York Supreme Court’s Appellate Division, Fourth Department. Additionally, earlier this year, the Rieger heirs filed a motion for partial summary judgment in the lower court for which oral argument is scheduled in late spring 2022.

Detail of the Schiele work

One look at the rendering of Edith Harms Schiele in the work at issue – her Klimt-esque patterned skirt (a nod to Schiele’s iconic mentor) wrapped around negative space and pointing up to the sitter’s demure countenance – and it is obvious why it is so ardently fought over. Yet a question looms as to whether the foundation’s dogged pursuit of this work, valued at approximately $8 million, runs counter to its stated mission (available via its website) “to support the visual arts […] to enhance the appreciation, knowledge and enjoyment of this central aspect of our culture.”

The foundation’s strategic choices in this case have attracted some criticism. As counsel to one of the heirs put it recently, how do “abusive litigation tactics” waged against Holocaust victims’ heirs enhance “our culture”? And what is the proper approach to advance the appreciation, knowledge and enjoyment of works looted by the Nazis and subsequently held by a third party? Perhaps the clearest path to cultural enhancement lies in the words of the HEAR Act which were repeated in the Reif case: to lay aside “significant procedural obstacles” and allow claimants the opportunity to seek justice (HEAR Act, § 2(6)).

[1] Robert Owen Lehman Foundation, Inc. v. Israelitische Kultusgemeinde Wien, et al., Index No. E2019008883 (Sup. Ct. Monroe Co. 2022), NYSCEF Doc. No. 610, Notice of Entry with attached 5 January 2022 Order and 23 November 2021 Amended Decision.