The Art Law Report

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

Gurlitt Relatives Formally Challenge Will that Named Kunstmuseum Bern as Heir

Posted in Gurlitt Collection, Museums, Restitution, World War II

When we wrote yesterday that everything had been said before seeing how the press conference plays out on Monday at which the Kunstmuseum Bern and Germany will make an announcement, it was somewhat tongue in cheek.  Today provides an example why: relatives of Cornelius Gurlitt, who would be his heirs at law in the absence of the will that named the Kunstmuseum Bern as his heir, formally announced a challenge to that will today in a Munich court

Uta Werner is, according to accounts, the first cousin of the late Cornelius Gurlitt.  Her father Willbald Gurlitt, and Cornelius’s father Hildebrand Gurlitt were brothers.  Her announcement claims the full support of her brother Dietrich, as well as her children.  According to today’s reports, the relatives were content to see how the Kunstmuseum decided and then take action, but that after receiving the expert opinion from psychiatrist Helmut Hausner that questioned his ability to make that decision and raised the prospect that he was delusional, changed their minds and decided to challenge the will. 

Timing for resolution of the challenge is unclear, but it will certainly dampen the atmosphere of Monday’s press conference, since whatever deal the museum and Germany have struck now risks being undermined if the will does not survive.  To state it plainly, the museum only gets the art if the will is valid, but if the relatives convince the German court that Cornelius was not able to make a will of his own volition, then it has no effect at all. 

Gurlitt and Kunstmuseum Bern Press Conference in Berlin Monday November 24, 2014

Posted in Gurlitt Collection, Restitution, World War II

The federal government of Germany, the Bavarian Ministry of Culture, and the Kunstmuseum Bern announced today that they will hold a joint press conference on Monday November 24, 2014 concerning the bequest by Cornelius Gurlitt to the Swiss museum when he died.  It seems hard to imagine that such an event would announce anything other than acceptance by the museum and perhaps some sort of side agreement with Germany and/or Bavaria.

Less likely is any resolution of the issue of Gurlitt’s testamentary capacity or his heirs at law’s view of that (one set of heirs distanced themselves mid-week in Der Spiegel from the Hausner expert opinion that cast doubt on his ability to make the will).  Other articles have followed this week, including Swiss Info (I’m quoted) and the Wall Street Journal.

Everything else has been said for now.  So we shall see. . . . 

Expert Opinion Casts Doubt on Gurlitt’s Testamentary Capacity to Make the Will that Names the Kunstmuseum Bern as Heir

Posted in Gurlitt Collection, Restitution, World War II

While we have tried to read the tea leaves and predict what the Kunstmuseum Bern will do on or before November 26 (the deadline to accept or reject the appointment as Cornelius Gurlitt’s heir)—and what others might do if the museum turns it down, less prominent has been the validity of the will in question itself.  It is far from a forgone conclusion, however, that his last-minute will would hold up under scrutiny.  The circumstances alone—an elderly person, under enormous international scrutiny, placed under a guardianship—beg the question.

After recent ruminations on the other heirs’ intentions, the Süddeutsche Zeitung reported on an expert opinion written by psychiatrist Helmut Hausner.  According to the SZ, Hausner highlighted several concerns:

·         Gurlitt was suffering from “paranoid delusions”

·         His “decision making process” had been “distorted” by the delusions, which existed as a “separate disease” since the 1960s

·         Hausner cited letters in which Gurlitt had expressed concern “for decades” of being persecuted by the Nazis.

·         He feared a plot to take away the pictures he inherited from his father Hildebrand.

In Hausner’s estimation, Gurlitt named the museum as his heir to escape the Nazis in Germany that he believed were pursuing him.

Given all this on the one hand, and the actual situation in Germany on the other (i.e., that Nazi Germany ended almost 70 years ago), one can wonder if he was indeed fit to make such a bequest.  It would be stunning if the museum’s decision ultimately did not matter, but no less surprising than so many other developments in this case. 

If the Kunstmuseum Bern Says No: Gurlitt Heirs Discuss Plans if They Inherit Schwabing Trove

Posted in Gurlitt Collection, Restitution, World War II

As the November 26, 2014 deadline approaches by which the Kunstmuseum Bern must accept or reject the appointment as Cornelius Gurlitt’s heir and the bequest of the paintings seized by the Bavarian government on suspicions of Nazi-looting concerns (as well as those in other countries that were not seized), most observers expect the museum to accept the appointment, albeit perhaps with some side agreement with the German government.  But what if the museum says no?  Reports floated this week of what Gurlitt’s heirs-at-law might do in that event.

As has often been the case, coverage diverged sharply between English and German.  Several articles appeared in English reporting that the attorney for the family of what appears to be Cornelius Gurlitt’s first cousin.  Hildebrand Gurlitt, the dealer with rights to trade in “degenerate art” had a brother Willbald, whose wife was reportedly Jewish.  As a result, the English-language articles posited, the family had pledged to return anything that had been looted “immediately and without anything in return.”  Left unsaid (and not terribly surprisingly, given that it was a press release) is the important question of looted according to whom.

Interestingly, however, the German headlines focused on a different part of the family’s statement: art subjected to the “degenerate art” action but not looted from individuals.  One of the historical chapters that the Gurlitt story revived was the role of German museums in the Nazis’ targeting of disfavored art.  When the Degenerate Art Action declared that such things could no longer be sold except by approved dealer (like Hildebrand), they also looked at the country’s own museums, which contained significant Impressionist and Modernist collections.  These, too, were targeted and sold on the international market, with the proceeds going the Nazi state.  Many of the works—as many as 460—in the Gurlitt trove may belong in this category, rather than “looted” art from persecuted individuals.  What should happen to that art?

This is the issue that got the most press overseas.  Monopol, the magazine from which most English-language sources got the family’s statement, reportedthat Wolfgang Seybold (the attorney) stated that those works would be exhibited permanently in a German museum.  He added, “The family hopes that the class works of Modernism, that Hildebrand Gurlitt saved from the “Degenerate Art Action” can remain together and be displayed permanently in a German museum.”  The Süddeutsche Zeitung has a similar story here.  The SZ reminded that these heirs had been quoted back in May as expressing hope that the museum would accept the appointment, but walks that back a little now to say only that they would assume 100% of responsiblity for the inheritence if it comes to that.

This puts an interesting spin on the historical story, in which Hildebrand is portrayed as savior rather than opportunist.  But it would certainly be an interesting compromise that might provide a vehicle for ongoing discussion of the issue, rather than see the works disappear into private hands. 

Full Ninth Circuit To Rehear “Innocence of Muslims” Copyright Appeal, Could Right Earlier Panel’s Error

Posted in Copyright, Fair Use, Intellectual Property

Fresh on the heels of accepting en banc review of the appeal over the constitutionality of the California Resale Royalties Act, the Ninth Circuit Court of Appeals has decided to rehear Google’s appeal of the injunction against it after actress Cindy Lee Garcia claimed a protectable copyright in her performance of “Innocence of Muslims.”  While, as before, one should hesitate to read too much into the mere fact of en banc review, the three-judge panel under review now stands a good chance of being overturned (as it should).

In March of this year, a three-judge panel ruled that an actress in “Innocence of Muslims” was likely to prevail on her claim that she had an independently copyrightable performance distinct from the movie itself.  Despite being widely derided by copyright experts when she filed it, Garcia successfully appealed the District Court’s denial of a preliminary injunction, meaning that Google and YouTube had to remove the video affirmatively from public availability.  The director was also sued, but Google was targeted primarily because of the film’s availability on YouTube.  Thereafter, the Ninth Circuit solicited input on whether it should rehear the case before all judges in the circuit (“en banc”), which it has now decided to do.  A similar case was filed recently, which will most certainly be affected buy this development. 

The controversy (over the decision, not the original movie) broke down along a few different lines.  First, the work seemed almost certainly to be one for hire under a specific provision of the Copyright Act for motion pictures (17 U.S.C. § 101 says that “a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work”).  In that event, even if Garcia’s performance were independently protectable, the hiring entity would trump her rights. 

Second, the remedy of an injunction brought the First Amendment into focus.  Compelling the filmmaker and Google, in effect, not to speak is a “prior restraint,” a concept long looked at with disfavor.  Indeed, since the decision earlier this year that already appeared shaky in its own right, the Supreme Court has continued its recent trend of treating First Amendment rights as almost inviolable.  That did not explicitly play a role in the order for rehearing, but it most certainly will in the argument that follows. 

Lastly, fair use did not come up in the prior decisions, but it still may.  If, as Garcia argues, she thought her performance would be used for something entirely different that what she finds so offensive in “Innocence of Muslims,” then the very fact of how different it became may well make the second film transformative enough (relying on the recent trend in fair use cases), to allow distribution to proceed even if Garcia is the copyright holder.  If Richard Prince can desecrate respectful images of Rastafarians with pornography and win the fair use argument, then why wouldn’t the transformation of idyllic pastoral scenes into an anti-Islamic screed be similarly transformative?  Giving offense may help the appealing parties here. 

Make no mistake, this case is very, very important.  Its potentially disruptive effect on the filmmaking industry is considerable.  Argument has been scheduled for the week of December 15, 2014.

 

 

Art Finance And Law Conference Series in London and Geneva

Posted in Art Finance, Events

A terrific pair of events organized by the Art Law Foundation in Geneva has been accounced.  As the Foundation describes it:

The aim of the series is to examine the growing practice of art investments, and the use of art as an investment asset. Various top speakers from academia and practice will explore securitisation of art as an asset, the differences between art funds and hedge funds, the peculiarities of the portfolio and fund management, the different types of loans against art collateral, and the risks and rules for art investments.

The first of the two events is in London at the end of this month, November 26, 2014 at the Institute of Contemporary Art, The Mall, London SW1Y 5AH.  Speakers will include Philip Hoffman, Chief Executive of the Fine Art Fund Group, David Arendt, Managing Director of The Luxembourg Freeport, Paul Aitken, Founder and Chief Executive of borro, Anna Dempster, Senior Lecturer and Leader of the Art Business and Research Unit at Sotheby’s Institute of Art, William Pearlstein, New York Attorney specialised in art law, Sebastian Fahey, Director Senior Loan Portfolio Manager at Sotheby’s Financial Services, Li Jun Xian, banker at Emigrant Bank Fine Art Finance, Melanie Gerlis, Art Market Editor at The Art Newspaper, Marco Mercanti, Founder and Executive director Oblyon Art Business Intelligence and Stefanie Berloffa-Spadafora, Head of the Legal Department Oblyon Art Business Intelligence, and Tim Hunter, Vice President Art Financing at Falcon Fine Art.

I don’t know yet whether I’ll be able to make it to the London event, but it looks very interesting and worthwhile.  The conference program and registration is available here.

A second event will be held on January 26, 2015.  Details will be forthcoming. 

Reports that Gurlitt Task Force May Not Meet Deadline—What Happens Then?

Posted in Gurlitt Collection, Restitution, World War II

There were reports over the weekend that the Gurlitt Task Force, currently reviewing the provenance of more than 900 of the 1,280 works of art seized from Cornelius Gurlitt’s apartment, may not complete that review within the year reportedly set out in the agreement between Bavaria and Gurlitt before he died.  There is still confusion about whether the Task Force was indeed foreshadowing a missed deadline (the agreement was in April, so the notion that the review would continue “into 2015” is not necessarily inconsistent with completing its task within one year), but assuming it was, what happens then?

Above all else, it spotlights the ongoing transparency problem.  When the agreement was announced, all that was made public was a press release.  To the best of my knowledge, an actual copy of the agreement has never been made public.  Issued on the letterhead of the Bavarian Ministry of Justice, the parties stated in that press release that Gurlitt:

stated his willingness to allow provenance research on a voluntary basis once the works are released from police custody. Mr Gurlitt will allow the Task Force to continue researching the provenance of those works in the trove suspected of having been confiscated from their owners by the Nazis or of being works the Nazis considered “degenerate art”

With regard to the Task Force, it went on that the Task Force:

aims to complete the main substance of its provenance research within a year. Works for which the Task Force has not completed provenance research within the year will be returned to Mr Gurlitt. But Mr Gurlitt will ensure continued access to the works for the provenance research to continue. If any claims for restitution have been or could be made, the works will remain in fiduciary custody even after the year has elapsed.  Mr Gurlitt can designate at least one researcher to work with the Task Force to ensure his interests are protected.

The most pointedly that any German official would describe Gurlitt’s actual commitment was to say that he had “expressly” agreed to “fair and just solutions” pursuant to the Washington Principles. 

In the absence of a copy of the agreement, all of this simply begged the question of exactly what binding commitments the parties made—if any.  Even if the Task Force recommended restitution, what if Gurlitt (or now his heirs, including the Kunstmuseum Bern if it accepts that role) disagreed?  Has he committed to follow the Task Force recommendation, or merely consider it in reaching a “fair” result? 

The latest news lays bare the other latent concern that many expressed when the deal was struck: a year is likely insufficient to make conclusive provenance determinations absent a massive investment of resources and time.  What then, if the research is not complete?  First, it would seem to oblige the physical return of everything whose review is incomplete to Gurlitt and/or his heirs.  That would, despite dire predictions of litigation, probably reduce the available forums for claimants, certainly with respect to Germany which would no longer have custody of the objects and be vulnerable to FSIA suits here in the US (though one can still be liable for conversion if one wrongfully disposes of property that one shouldn’t have). 

Second, the vagueness as to the enforceable covenants makes the consequence even harder to gauge.  Assume that Gurlitt’s heirs are bound to continue to make the works available for provenance research, and that they fulfill that commitment.  And assume that a year from now, the Task Force issues more recommendations that some objects be returned.  Is the only obligation to be “fair and just”?  That sounds terrific, but what does it mean in private contract?  If contract terms can’t be understood, they can’t be enforced. 

Lastly, while one assumes the agreement was drafted well, to what extend were Gurlitt’s contract rights enforceable by or against his heirs and successors?  We still do not know. 

After our review of the Gurlitt saga last week, Anne Webber of the Commission for Looted Art in Europe penned what I think is the best retrospective on the story yet on the anniversary.  She noted:

While exemplary in the way it has dealt with the rest of its Nazi legacy, art is Germany’s Achilles heel. Bound up with its identity as the creator of great art, it is still immensely difficult for Germany to come to terms with the role it played in enabling Jewish collectors to be persecuted and Jewish collections to be seized.

This latest news only adds to that concern.

BREAKING-Detroit Plan of Adjustment Approved, Judge Praises Decison Not to Sell DIA Collection

Posted in Bankruptcy, Detroit Bankruptcy

Judge Rhodes has approved the plan of adjustment for Detroit to emerge from bankruptcy.  More analysis to come, but most critically for our purposes it affirms the Grand Bargain and the security of the collection of the Detroit Institute of Arts.  We’ll post the full opinion when it’s published, but notably, Nathan Bomey at the Detroit Free Press reported from the courtroom that Judge Rhodes praised the decision not to sell the DIA collection: “Maintaining the art at the DIA is critical to maintaining the feasibility of the city’s plan of adjustment and the city’s future.”

 

 

Sullivan & Worcester LLP Obtains Complete Dismissal of $204 Million Claim Against Artmentum GmbH

Posted in Collections, Litigation

In between enjoying another excellent Art Law Day today at NYU, I am pleased to report that Sullivan & Worcester LLP’s Art and Museum Group scored a significant win this week. Our client Artmentum GmbH was sued in New York for $204 million in connection with a potential art collection sale. The plaintiff Art Assure Ltd., LLC and its principal Asher Edelman accused my clients of fraud and breach of contract, which they denied categorically. The matter was entitled ArtAssure Ltd., LLC v. Artmentum GmbH et al., No. 1:14-cv-3756 (LGS).

On Wednesday, the U.S. District Court for the Southern District of New York allowed our motion to dismiss and entered judgment for my clients. The press release detailing the decision is can be found here.

One Year After Gurlitt Revelation, No One is Pleased

Posted in Foreign Sovereign Immunities, Gurlitt Collection, Restitution, World War II

It has now been one year since Focus magazine in Germany broke the Cornelius Gurlitt story on November 3, 2013.  Looking back at the history of the case as it has unfolded since then, the overriding theme has been difficulty in obtaining accurate information about the current state of affairs.  The appointed Task Force has made only two recommendations, and the status of the bequest to the Kunstmuseum Bern is still up in the air.  And nobody seems remotely pleased. 

The facts are familiar by now to Art Law Report readers, but still worth summarizing.  The Focus article revealed that in early 2012, Gurlitt had attracted the suspicion of customs officials when returning from Switzerland by train (no mean feat in this era of ever-more-invisible borders).  A search warrant followed, leading to the spectacular discovery of more than 1,200 works of art in an unassuming apartment in Schwabing, Munich.  Yet this discovery was not made public, even as the Bavarian prosecutor’s own review raised the concern that many of the objects had been looted by the Nazis.  The name “Gurlitt,” while not well known, was hardly a secret in the realm of Nazi-era art matters.  Cornelius’s father Hildebrand had been an art dealer in the 1930s, and his grandfather (also named Cornelius) was a prominent academic in Dresden.  Hildebrand’s historic significance, however, related to the “Degenerate Art” action of 1937.  Pursuant to this program, Hildebrand Gurlitt was one of only four dealers authorized to trade in the modern and contemporary art that the Nazis deemed “degenerate.”  Thus, he would have had access to many works on the market only because of this declaration, from collectors ranging from persecuted Jews to German state museums.  Gurlitt claimed after the war that the bulk of his collection had been destroyed in the firebombing of Dresden, when it apparently had not.  When Hildebrand died in a car accident, the collection passed to his son. 

The Bavarian prosecutor seized the artwork from Cornelius Gurlitt’s apartment in 2012, but without any apparent plan of what to do with them.  When Focus revealed the collection’s existence, the worldwide reaction was enormous. Between November and April, Gurlitt assembled a legal team to seek return of the artwork, the Bavarian Minister of Culture proposed an amendment to the statute of limitations that became known as the Lex Gurlitt—thought it remains under consideration in the Bundesrat—and other troves of artwork were found, in particular in Salzburg.  The “lost art” center in Magdeburg slowly posted a list of the works, but the website initially crashed and the pace and scope of disclosure was the subject of much criticism.  Eventually Gurlitt’s legal team claimed that only a few works were suspected of being looted, but no one could tell if that meant only a few works had been specifically claimed (which was nearly impossible without knowing what was in the assembly, of course), or whether the universe of potentially looted art was that small. 

Then an agreement was announced.  A Task Force (which had been underway for several weeks by that point) would review all the works within a year.  The agreement has still never been made public, so it remains unknown whether Gurlitt committed to return any work deemed looted, or whether the Task Force would make conclusive determinations within that year, or just identify problem objects.

As those of us following the story were trying to make sense of the agreement, Gurlitt passed away.  In perhaps the biggest surprise since the discovery, he named the Kunstmuseum Bern (Switzerland) as his heir.  Despite conflicting reports that the museum had reached a decision, the world still awaits its decision on November 26, 2014 as to whether it will accept that appointment.

The story has captivated so much attention, in my opinion, because of the right-under-our nose aspects of it.  Gurlitt was living in a dense neighborhood for decades surrounding by great works of art.  But it also stirred up long-dormant questions about looted at in Germany, and unexamined collections. 

With the anniversary this week, a number of writers have also taken stock of the case.  Most coverage of the matter continues to be in German, after the initial reaction there has been very little analysis in English with the notable exceptions of the Wall Street Journal and the New York Times.  I continue to try to follow the German language coverage and make note of important analysis.

What is especially clear is how dissatisfied essentially everyone is with the state of affairs.  Focus, the same magazine that got the ball rolling a year ago, published an article this week in which it reported some claimants are considering claims against the Task Force itself.  Documents remain unavailable, and the pace of response, if any, has been slow.  Any even as to one painting that the Task Force recommended be returned to David Toren, Germany is resisting Toren’s lawsuit rather than giving the painting back.

With regard to the pending decision by the Kunstmuseum Bern, Ronald Lauder stepped into the looted art fray once again in an interview with Der Spiegel to argue that the museum cannot ethically accept the bequest, and that it will face an “avalanche of lawsuits” if it does.  As to the latter point, I’m not so sure relative to the current possession by Germany.  The biggest challenge for claimants has been figuring out whether they are claimants, since so little is known—still—about what there is.  But once known, Bavaria and Germany are open targets, presumably in Germany but certainly in the United States pursuant to the Foreign Sovereign Immunities Act.  If and/or when the artwork goes to the museum, a private Swiss foundation, however, the courts of the United States at least are quite unlikely to have jurisdiction over any such claims.  The museum and Germany seem to be engaged in some sort of negotiation about what happens after the bequest is accepted, but as with everything else, details are sparse.

The museum is going to decide this month.  But we still might not know what the museum was told, and whether the Task Force will say anything publicly. That decision will not really do anything to settle the state of uncertainty about looting and provenance, however. We are also less than six months away from the Task Force’s deadline, but once again what that output will be is anyone’s guess. 

One thing you can be sure of: we’ll keep watching the story and trying to make sense of the legal developments.