The Art Law Report

Providing timely updates and commentary on legal issues in the museum and visual arts communities

Portrait of Wally in Hindsight: What did it Really Change?

By Nicholas O'Donnell on Posted in Customs, Foreign Sovereign Immunities, Immunity from Seizure Act

A new piece at the Art Newspaper reflects on the importance of the Portrait of Wally case. Wally was seized in 1998 by customs officials on the theory that it was stolen property when imported into the U.S.  The painting sat in a warehouse for 12 years, until a settlement returned the painting to Vienna in 2010 and a payment to Lea Bondi’s heirs was made.  I recall well the citywide celebrations in the Austrian capital when the painting returned; banners on lampposts proclaimed Bildnis Wally kehrt zurück—Portrait of Wally returns!

In reviewing the post and thinking about the case, however, a contrarian thought sprang to mind.  That is, although Wally was the event that jolted restitution litigation into the public sphere, what real difference did the case make, other than perhaps unintentionally making it harder to recover disputed artworks?

First, Wally herself was seized on suspicion of a customs law violation.  Notwithstanding the recent inexplicable decision by Italian officials not to seek Immunity from Seizure Act (22 U.S.C. § 2459) protection for Christ Carrying the Cross Dragged by a Rogue, recently seized under the same theory that Wally was, holding off on loans into the United States until immunity from seizure has been granted is now standard practice—because of Wally. 

As a result, what other changes did the case bring about?  Perhaps Maria Altmann had the courage to start her case against Austria for the Klimt Portrait of Adele Bloch-Bauer because of the case.  And, without question, the Supreme Court decision that her case spawned threw open the courthouse doors to Foreign Sovereign Immunity Act (FSIA) litigants.  But who among them has succeeded?  Austria settled with Altmann ; other claimants are increasingly rebuffed by statutes of limitations.  The increasingly expansive interpretation of FSIA, as in Malewicz v. City of Amsterdam (which allowed the statute’s commercial activity requirement to be satisfied by the lending of the disputed painting itself) may lead directly to an amendment under consideration in the Senate (SB 2212) of the statute narrowing further the definition of commercial activity necessary to get in the courthouse. 

Without question, Wally changed the public awareness of restitution claims like nothing before or since.  But there is a good argument to be made that a restitution claimant is no better off than she was before Wally was seized.  As any litigator knows, a settlement has no real precedential value.  Wally did not stretch the contours of Nazi-specific disputes, nor get anyone around the statute of limitations.  It has indeed shaped the discussion, but Wally is back in Vienna.  Adele Bloch Bauer is in New York.  Most of the litigants have died. 

In retrospect, sometimes something that seems like it changed everything, was just unexpected.

Commentary Takes Shape on S.B. 2212, the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act

By Nicholas O'Donnell on Posted in Collections, Customs, Foreign Sovereign Immunities, Restitution, Uncategorized, World War II

It’s been a few weeks since the House passed the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act (H.R. 4086) and sent it on to the Senate for consideration as S.B. 2212.  It has bipartisan sponsorship there (Dianne Feinstein and Orrin Hatch), but no word yet on when it will be put to a vote.

As a reminder, the law would exempt the defendant’s commercial activity in the United States from analysis as a prerequisite (among others) to jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. § 1603 (FSIA) when that commercial activity related solely to lending the cultural object at issue, if that object had already been granted immunity from seizure under the Immunity from Seizure Act, 22 U.S.C. § 2459 (IFSA). 

That has provided enough time for commentary to take shape about the wisdom of the law.  Somewhat surprisingly, there has been a great deal of negative analysis of the law as it relates to restitution claims and exhibitions.  Others have been similarly critical, arguing that the law threatens restitution claims entirely.  Many have debated the effect that the law would have on the Russian loan embargo.

The view here is that the effect of the law would actually be more limited.  First, even if it had been in place five years, ago, it would have had no impact on the Chabad/Russian dispute over the Schneerson library.  That set of books has never been in the United States, so removing its presence here as a basis to exercise jurisdiction under the FSIA wouldn’t change the result.  Russia’s response to an adverse ruling—i.e. its refusal to participate further at all—has far more to do with the current embargo.  Whether or not the Chabad dispute and the resulting standoff is the reason for the proposed law doesn’t really matter. 

Second, the ultimate goal of a restitution claim has to be considered.  Consider for the sake of discussion that a painting had ownership issues in its country of origin (keep out Nazi claims, they are exempted from the proposed law’s reach).  The object is lent to the U.S., but granted immunity from seizure under IFSA.  Under the law as it is now, the object cannot be seized, but if FSIA’s other requirements are met, the act of the loan can allow the plaintiff to invoke U.S. federal court jurisdiction.  But to what end?  Even if the plaintiff wins, it cannot seize the object that is immune from seizure to which it has secured title.  Moral victories have real value, but winning a multi-year litigation that cannot result in the desired outcome does not seem like that much to give up.  The proposed law simply spares both parties the exercise. 

It is also open to debate how broadly the proposed change will even apply.  That is to say, how many foreign nations have no commercial activity in the United States except the loan of disputed artworks?  Of those, how many would loan a work without getting IFSA immunity?  Can the resulting number really be that high?  Are there any?  Since the Portrait of Wally case (which did not have IFSA immunity), immunity from seizure has been standard practice, and no sensible foreign owner is going to lend without it. 

In the more (in)famous cases of Nazi looted art, the law would have no effect at all.  So a painting commandeered by Hermann Göring, now in the hands of a new owner that has no contact with the U.S. other than loaning the painting could still be sued using FSIA (just as it could today). 

The oft-cited recent case in which of the disputed Christ Carrying the Cross Dragged by a Rogue by Girolamo Romano really has nothing to do with FSIA.  That order was issued under customs law (on which the proposed law has no effect) based on the allegation that the very act of import violated 19 U.S.C. § 1595a and other laws (addressed here before).  Moreover, there was no indication of whether the painting had IFSA immunity.  The United States obtained a default against the Italian lenders for their failure to make a timely claim, and settled with the claimed heirs in which the U.S. agreed to give them the painting.  The court did not, contrary to the tenor of much coverage of the result, rule on the merits of the restitution claim. 

Putting aside Russia’s embargo, which is impossible to defend, the law will encourage international exhibition loans.  If the loan of a painting was not going to result in its restitution anyway, isn’t encouraging those international exhibitions a good thing?

Von Saher claim against Norton Simon Museum dismissed as preempted under foreign affairs doctrine.

By Nicholas O'Donnell on Posted in Foreign Sovereign Immunities, Restitution, Uncategorized, World War II

Raising another hurdle to restitution claims, the U.S. District Court in Los Angeles against the Norton Simon Museum to the remnants of the famed Jacques Goudstikker collection, on the grounds that her case is preempted by the United States’ foreign affairs doctrine.  In an unusually apologetic decision, the court ruled that regardless of the merits of her claims, the law of foreign affairs makes the dispute inappropriate for resolution by civil litigation. 

The ramifications of this decision for wartime restitution claims could be very broad, and could be extended to a number of recent and pending cases.  Indeed, in its litigation with the Cassirer heirs over Rue St. Honoré, effet de pluie by Camille Pissarro, the Thyssen-Bornemisza Collection Foundation, which was unable to have that case dismissed on Foreign Sovereign Immunities grounds (the 9th Circuit ruled that even if Spanish sovereign defendants did not take those paintings, they may be sued because the taking itself was alleged to be wrongful) has filed notice of the Von Saher decision, arguing that it disposes of those claims as well.  The de Csepel case against Hungarian museums pending in Washington, DC is certainly vulnerable on this score as well; the impact of the 1973 US-Hungarian treaty is one of the issues certified on appeal. 

Von Saher is the daughter-in-law and sole heir of Jacques Goudstikker, a well-known Dutch art dealer during the interwar period.  Goudstikker purchased two paintings by Lucas Cranach the Elder, Adam and Eve from the Soviet Union in 1931.  Goudstikker fled the Netherlands in 1940 following the German occupation.  His extensive collection was forcibly sold in two events; the first an auction by the German bank Alois Miedl who purchased Goudstikker’s art dealership and some his property; the second the expropriation by Hermann Göring of virtually the entire Goudstikker fine art collection, including the two Cranachs.  The purposeful targeting of the Goudstikker collection is among the most notorious examples of the plunder by high-level Nazi officials of prominent Jewish collectors.  The U.S. Army recovered the Cranachs (and many other of Goudstikker’s paintings) after the war, and they were returned to the Dutch government in 1946. 

Goudstikker’s widow filed timely claims with the Dutch government for her family’s property, and reached a settlement in 1952.  Under that settlement, she received most of the property obtained by Miedl, but the settlement did not cover the art collection taken by Göring.  The Dutch deadline for claims lapsed.  The paintings were then the subject of a claim concerning Goudstikker’s initial acquisition from the Soviet Union.  George Stroganoff-Scherbatoff successfully petitioned the Dutch government to return the paintings to him on the grounds that the Soviet Union had illegally taken the works before Goudstikker bought them.  Stroganoff-Scherbatoff eventually sold the Cranachs to the Norton Simon Art Foundation around 1971, and they have been exhibited by the Norton Simon Museum roughly since then.

In 1998, Von Saher filed a claim with the Dutch Secretary for Education, Culture, and Science, seeking the return of property taken by Göring.  The claim was rejected as untimely, and Von Saher’s appeals were denied, largely on the rationale that the late Mrs. Goudstikker “made a conscious and well considered decision to refrain from asking for restoration of rights” concerning the Göring-confiscated property.  The Dutch government and appellate courts made this decision notwithstanding the by-then-well-known “Washington Principles.”  The Washington Principles came out of the 1998 Conference on Holocaust-Era Assets, which encouraged investigation into wartime provenance, and appropriate restitution beyond objective legal obligations.  Although the decisions rejecting Von Saher’s requests noted the existence of the Washington Principles, they held that the Goudstikker case was an exception where the original claimant had made a knowing waiver. 

As part of the growing publicity over wartime art claims, California enacted Section 354.3 of its Code of Civil Procedure, which effectively abolished the statute of limitations for any claim to return Holocaust-era artwork, defined as “any article of artistic significance taken as a result of Nazi persecution during the period of 1929 to 1945.” 

In 2007 Von Saher sued the Norton Simon Museum in U.S. District Court in California to return the Cranachs, and the museum moved to dismiss.  The District Court dismissed the case on preemption grounds, concluding that the law abolishing the statute of limitations for wartime artwork claims “intrudes on the federal government’s exclusive power to make and resolve war, including the procedure for resolving war claims.” 

On appeal in 2010, the Court of Appeals ruled slightly differently, holding the federal government’s role in external restitution ended in 1948, and thus did not occupy the area of law sufficient to forbid state laws on the subject under the Supremacy Clause (the basis of preemption law).  The Court of Appeals upheld the dismissal, however, because “the power to legislate restitution and reparation claims[] is one that has been exclusively reserved to the national government by the Constitution.”  After thus striking down the abolition of the statute of limitations, the court remanded for further proceedings to determine when Von Saher “discovered” her claim to the painting to enable the District Court to rule on whether the claim was timely. 

In response, the California legislature amended the law again to hold (retroactively) a plaintiff only to actual, rather than constructive, notice of her claims to begin the statute of limitations.  That is, only after a plaintiff has literal knowledge of the facts giving rise to her claim does the statute commence; even if obvious facts knowable to her would put a reasonable person on notice, she is safe.

Von Saher duly amended her complaint, and the museum moved to dismiss again.  Rather than striking down the amendment to the statute of limitations that made the claim timely, however, the District Court held that the foreign policy of the United States is such that it has restituted artworks to nations, not individuals, and thus preempts state law claims.  (Preemption has many twists and turns, but it is essentially the idea that where a federal law occupies a particular subject matter, states may not legislate on the topic).  Relying on the 9th Circuit’s earlier decision, the Court deferred to the State Department’s determination that foreign nations, once art is returned there, are better situated to sort through the differences between real and sham transactions during the war. 

The Court looked to the briefing that went to the Supreme Court when Von Saher unsuccessfully sought to have the striking down of the statute of limitations law reviewed by the high court.  There, the State Department asserted the United States’ interest in finality of restitution claims.  The Court disagreed with the plaintiff that the State Department’s briefing conflicted with the Washington Principles and the Terezin Declaration on Holocaust Era Assets and Related Issues.  In effect, the Court held that there is no single way to encourage restitution of stolen artwork, and the State Department’s view is at least consistent with the Terezin Declaration (which is not binding, in any event).  Whether it is the best manner is not for the civil courts to decide, the judge held.

More interesting still, the case makes no mention of the 5th Circuit ruling in Dunbar v. Seger-Thomschitz (2010), in which that Court of Appeals rejected the claimant’s argument that the Terezin Declaration, through the Holocaust Victims Redress Act (HVRA), Pub.L. No. 105‑158, §202, 112 Stat. 15, 17‑18 (1998), preempted state law (in that case she argued that the preemption should bar application of the state-law statute of limitations).  Whereas the Dunbar court rejected Seger-Thomschitz’s reliance on the Supreme Court’s decision in American Ins. Ass’n v. Garamendi (2003) to argue in favor of preemption, the Von Saher court also cites Garamendi—for the opposite conclusion.  These can probably be reconciled because Seger-Thomschitz was arguing for a federal common law of the sort disfavored by courts. 

A strong precedent for museums, but expect controversy to follow.  If the 9th and 5th Circuits eventually conflict on the preemption point, the Supreme Court may be interested in hearing the case (having turned down her first petition on the statute of limitations question last year).

Sullivan & Worcester LLP Art and Estate Planning Panel With Citi Private Bank Postponed

By Nicholas O'Donnell on Posted in Uncategorized

The joint panel presentation by Sullivan & Worcester LLP’s Art and Museum Law Group (home of your Art Law Report) and Citi Private Bank next Wednesday, April 11, 2012 in Boston that I was scheduled to moderate with Cornelius J. Murray, III, Trust & Estates Practice Chair, Sullivan & Worcester LLP; Suzanne Gyorgy, Head of Art Advisory & Finance, Citi Private Bank; and Brian Bandler, Director, Wealth Planner, Citi Private Bank has been postponed.

We will post any updates about rescheduling if and when they are available.

St. Louis Art Museum Prevails Against U.S. Claim to Mask of Ka-Nefer-Nefer

By Nicholas O'Donnell on Posted in Customs

 

The St. Louis Art Museum has defeated the federal goverment’s efforts to seize the Egyptian Mask of Ka-Nefer-Nefer under U.S. customs laws. 

The Mask of Ka-Nefer-Nefer is a funerary mask of an ancient Egyptian noblewoman.  The St. Louis Art Museum purchased it from a dealer in 1998.  Sometime later, the United States began to seek its seizure, arguing that it was stolen property.  The museum sued the government in the first instance to seek a declaration that the attempts to seize the Mask should cease.  The United States then brought a civil forfeiture action under U.S. customs laws (proceedings in which the object is the defendant, making the case United States v. The Mask of Ka-Nefer-Nefer; it is left to the person claiming ownership to file a claim in which she bears the burden of proof).  In its papers, the government essentially argued that the fact that the Mask had gone missing in Egypt by 1973 and then surfaced in a sale in the United States decades later, meant that it could not have been imported legally.

As readers of the Art Law Report will recall, under 19 U.S.C. § 1595a, whether the importer, or subsequent purchaser knows the object is stolen is irrelevant; if the U.S. can show that it was already stolen when imported, the claimant is generally out of luck.  The only upside for claimants in these situations is that the governing procedural rules require the government to allege with particularity the circumstances showing that the object was “stolen, smuggled or clandestinely imported or introduced.” 

As noted above, the claimant (here the St. Louis Art Museum) often faces a daunting task in these circumstances.  The court took a particularly critical view of the government’s allegations, however.  The court stated “the claimant cannot even be sure of the who, what, when or where of the alleged events surrounding the alleged ‘stealing,’ nor can the Museum ascertain if the Government is pursuing of the Mask based on alleged theft or a unlawful import/export, or both.”  Harsher still, the court held that “the Government has been completely remiss in addressing the law under which the Mask would be considered stolen.” 

It is, no matter how you look at it, a momentous win for the museum.

Tacheles Emptied and Scheduled for Destruction—End of the Original Occupy Movement

By Nicholas O'Donnell on Posted in Uncategorized

I can’t let today’s news about the Kunsthaus Tacheles in Berlin go unremarked.  A center for art and culture since the fall of the Berlin Wall, it has apparently ordered vacated, with occupants carried out by force.  Ironically, it’s really about a story about art and the absence of a legal framework, a building in the hottest part of the hottest city in Europe that no one seemed to own. 

Tacheles stands (for now) on Oranienburger Straße, near the (now rebuilt) synagogue in what was Berlin’s Jewish quarter.  Since its construction around 1909 it has been, variously, a department store, the Haus der Technik of the AEG conglomerate, a Nazi prison for French soldiers, a movie theater, and a trade union hall. 

Damaged in the war and slated for demolition numerous times in the late DDR period, a brief confusion over who owned it led to its occupation in 1990 (post-Wall but pre-unification) by the Künstlerinitative Tacheles, the Artists’ Tacheles (“straight talk” in Yiddish) Initiative.  Two decades before Occupy Wall Street, the building became an impromptu center for art, culture and music in the euphoric years after the fall of the Berlin Wall.  It’s hard to remember now, but equally hard to overstate the sense of possibility in Berlin then, drawing on the perceived glories of the Weimar ear, triumphs over Nazism and Communism, and new European culture. 

I spent a fair amount of time there while living in Berlin in 1996, and during visits since.  Tacheles was a place to be, to be seen, and marvel at the power of imaginations unbound after unspeakable repression.  It was provacative, fun, and lacked a rear wall of any kind (the original vaults were exposed).  It was also a place that for at least ten years (arguments will abound over whether it had been a tourist trap recently) defied the idea that art has to belong to anyone. 

I will miss it and knowing that it is there.

Foreign Cultural Exchange Jurisdictional Immunity Clarification Act: House Votes to Amend FSIA to Exclude Artwork Loan as Basis for Jurisdiction

By Nicholas O'Donnell on Posted in Foreign Sovereign Immunities, Legislation, Restitution, Uncategorized, World War II

The House of Representatives approved the Foreign Cultural Exchange Jurisdictional Immunity Clarification Act on March 19, 2012, to remove the display of a work of art in the United States as basis to sue a foreign sovereign here.  The law touches on important distinctions between immunity from suit—when a party cannot be sued at all—from immunity from seizure—when a particular object or asset cannot be seized.

The bill would be an amendment to the Foreign Sovereign Immunities Act (FSIA).  In the United States, foreign countries and their “instrumentalities”— entities that can include the government itself or, as applicable here, state run museums—are generally immune from suit when they are acting in a governmental capacity.  The FSIA creates a number of exceptions to that general rule.  As it relates to works of art, the FSIA has become a flash point for bringing restitution cases in the United States, even when the theft alleged occurred elsewhere.

To satisfy the FSIA however and get into U.S. federal court, the defendant must be engaged in a commercial activity and satisfy one of the law’s other requirements (art cases most often invoke the ever-more-broadly construed exempting from immunity takings in violation of international law).

At possible tension with this is the law providing immunity from seizure of certain cultural objects designated as such by the State Department under 22 U.S.C. § 2459.  Museums and similar institutions can apply to the State Department for a declaration that regardless of any other debts or obligations on the part of the lending country, a particular work of art may not be seized or attached to satisfy a money judgment or otherwise compel compliance with a court order.  Particularly since the Portrait of Wally case in 1998 (a painting that did not have such immunity from seizure and was seized and warehoused for 12 years until the dispute was settled), applying for this immunity is standard course. 

Under the current law, however, even if a particular object cannot be seized because it is immune from such under 22 U.S.C. § 2459, the very act of lending it to the United States could provide the commercial activity to satisfy the FSIA, and thus provide the basis for that foreign government to be sued here (including, perhaps, being sued about the artwork that cannot be seized, to make things even more complicated). 

The bill would provide an exception to these exceptions (and another exception to that, no less, see below).  It would add a new provision to the FSIA itself, providing that the lending of an object given immunity from seizure under 22 U.S.C. § 2459 can not constitute the commercial activity necessary to satisfy the FSIA. 

The bill makes good sense.  There have been increasingly awkward cases of foreign governments’ refusal to lend objects to the United States, and the law would certainly give them added comfort.  Admittedly, however, it is hard to think of a country with a lending collection that could not otherwise be found to be engaged in commercial activity here.  And, importantly, Nazi-era claims—those clearly the most likely to be litigated—are exempted.  In other words, lending a painting allegedly appropriated in Europe during the war could in and of itself constitute commercial activity in the U.S. and allow a lawsuit to proceed.  Finally, it seems unlikely to resolve the impasse with Russia,  because the law would not be retroactive.

The bill will reportedly now go to the Senate next week for consideration.  No word yet on the reception that awaits.  We will watch for developments.

Poster Collection Seized by Nazis Ordered Returned by German High Court

By Nicholas O'Donnell on Posted in Collections, Restitution, World War II

 

Catherine Hickley of Bloomberg reports today from Berlin about a court-ordered return of more than 4,000 once owned by Hans Sachs, a Jewish dentist chased out of Nazi Germany.  The Bundesgerichtshof (BGH) is Germany’s highest civil court, and handed down the decision.

At one time, Sachs’s collection had more than 12,000 posters by artist that included Henri de Toulouse-Lautrec, Ludwig Hohlwein, Lucian Bernhard and Jules Cheret.  The Deutsches Historisches Museum (DHM) in Berlin, a museum of German history, has held for several decades parts of a poster collection was seized from Sachs in 1938.  After his arrest around Kristallnacht and incarceration in Sachsenhausen concentration camp (outside Berlin), Sachs was freed and he, his wife, and 14-month old son fled the country. 

Although the elder Sachs was later paid financial compensation, the high court ruled he never lost title to the collection, and his heir (son Peter) is now entitled to it.  The DHM seems to have argued that Sachs acceptance of monetary compensation foreclosed the issue, but the court disagreed.  The DHM predicted in its statement an opening of the floodgates to new claims as a result, but really that will be driven by what similar objects still reside in Germany (knowledge of which the DHM probably has as well or better than anyone). 

The facts of the case offer an interesting comparison of how many restitution claims break down.  It seems from the background that the collection was seized because (a) Josef Goebbels wanted it and (b) Sachs was Jewish and therefore a target at the time.  Many such objects remained in German museums or with Nazi officials at the end of the war, and great effort was made by the Allies to return them.  These works tended to be Old Masters, to which this case is an exception.  Contrast other cases involving works that were seized as “degenerate”–i.e. too modernist for Nazi taste (whether owned by persecuted minorities or not) and sold for hard currency outside of Germany itself in the 1930s and 1940s.  These works then made and still make their way through the worldwide art market. They also tend to be behind the biggest restitution claims, as they are often late 19th and early 20th century paintings valued highly by today’s market.

Counterintuitively, these days it is rarer to find a wartime restitution dispute about a fine art collection in a German museum collection (as opposed to elsewhere in Europe or in the United States).  This is probably because many of the countries occupied by Germany (read: France) didn’t really start taking a hard look at their state museums until the 1990s, and the dormancy of the issue in the United states until the 1990s is well-chronicled.  For obvious reasons, German museums have been scrutinized much more, and much of what was taken during the war was given back when possible, made public, or taken to the Soviet Union.

California Resale Royalty Act Case Against Sotheby’s, Christie’s, and eBay to Be Dismissed?

By Nicholas O'Donnell on Posted in Collections, Legislation

Donn Zaretsky at the Art Law Blog (whose prior commentary on the case gives excellent analysis of the Commerce Clause and other issues) reports that the U.S. District Court issued a tentative ruling at a hearing on Monday to dismiss the California Resale Royalty Act cases against Sotheby’s, Christie’s and eBay (Chuck Close is one of the plaintiffs).  No written order has come down, but we will report and analyze when it does.  This is big news; for the moment the case docket indicates only that the hearing took place and that the judge took the matter under advisement.

Essentially, the issue raised by the defendants is whether California can pass a law concerning art re-sales that could affect commerce outside of the state.  If it does, it could run afoul of what lawyers call the Dormant Commerce Clause to the U.S. Constitution.  There is, in fact, no Dormant Commerce Clause.  Rather, the affirmative grant of authority by the Commerce Clause to the U.S. Congress to regulate interstate commerce is taken, by negative implication, to preclude regulation of interstate commerce by the states.  If that were the case, it wouldn’t matter if the defendants violated the California Resale Royalty Act, because law would itself be unconstitutional.  The case could then be dismissed at the preliminary stage. 

Stay tuned for the final result and more discussion.

Barnes Relocation Case Sanctions Award Upheld, But Also Reduced

By Nicholas O'Donnell on Posted in Charitable Foundations, Estate Planning

Montgomery County Orphan’s Court Judge Stanley R. Ott, the presiding judge in the unsuccessful challenge to the Barnes Foundation’s move to Center City in Philadelphia has upheld his award of sanctions against the plaintiffs challenging the move.  After a recent hearing, the judge awarded the Barnes $25,000 in attorneys’ fees from the Friends of the Barnes, and a separate $15,000 form a lawyer who had filed a challenge in his own right.

Attorneys’ fees are generally not awarded in the American court system, unless a contract or statute provides.  The other exception is that most courts have some provision to award legal fees as a sanction and a deterrent against cases that the court finds to be objectively frivolous (a generalized description). 

Here, the Barnes persuaded the judge that the appeal to “new” evidence spotlighted in the movie The Art of the Steal that was behind the most recent challenge was not, in fact, new, and that the renewed challenge to the relocation was thus unreasonable. 

Interestingly, the judge awarded a flat $25,000, rather than the $64,269.41 in fees that the museum actually incurred.  Based on past experience, this strikes me as the judge—who made no findings of fact or further comment in awarding that amount—giving both sides a bit of a break.  An award of fees is extremely rare (kudos to the Barnes’s team), but paring the number down by a third is certainly an easier pill to swallow for the plaintiffs than the full amount.  It probably dissuades either side from appealing, too.