By Sara Osinski.

Alexander Calder (“Calder”) was a renowned American sculptor, famous for his wire sculptures and “mobiles,” which are a “type of kinetic art that relies on careful weighting to achieve balance and suspension in the air.”[1] Shortly before passing away in 1976,[2] Calder gave one of his standing mobile sculptures to his trust and estate lawyer, Paul LeSourd Meaders, Jr. (“Paul Meaders, Jr.”).[3] The sculpture was registered under Application No. A04861 in The Calder Foundation’s archive (the “Work”).[4]

Paul Meaders, Jr. held onto the Work until his death on November 27, 1997.[5] He was survived by his son, Paul L. Meaders III (“Paul”), his daughter Phyliss P. Meaders (“Phyliss”), and his second wife Jane D. Meaders (“Jane”).[6] Paul Meaders conveyed the Work by will to Jane.[7] The Work remained in Jane’s home until she died on October 24, 2001.[8]

Upon death, Jane’s estate was worth approximately $2.7 million. Jane left a will, which was admitted to probate,[9] nominating her step-son Paul as executor and granting him “broad discretion” in administering her estate.[10] Jane’s will also bequeathed “all tangible personal property” and the residuary estate, which included the Work, to Phyliss and Paul “in equal shares.”[11]

On July 23, 2002, Paul in his role as executor filed a New York Estate Tax Return for Jane’s estate, which appraised the Work at $30,000.[12] Paul exercised his “broad discretion” and took possession of the Work.[13] By July 23, 2002, Paul closed and fully distributed Jane’s estate.[14]

Alexander Calder, “Untitled” (1976), standing mobile, 14 x 9 x 4 in. Exhibit A to the Complaint filed on June 8, 2018. © 2020 Calder Foundation, New York / Artists Rights Society (ARS), New York.

The work remained in Paul’s possession for approximately 15 years.[15] During this time, Phyliss never physically possessed the Work, nor did she invoke any legal process to obtain possession over the Work.[16] Around January 2015, Paul emailed Phyliss stating that he considered selling the Work.[17] After receiving Paul’s email, Phyliss did not respond to the anticipated sale of the Work until almost two years later.[18]

In December 2015, Paul and his wife discussed selling the Work to Antoine Helwaser (“Helwaser”), who was the owner of Helwaser Gallery.[19] While negotiating with Helwaser, Paul held himself out as the sole owner and as a person who had full authority to sell the Work.[20] Paul provided Helwaser with the Work’s provenance, which stated that the Work was “acquired from Jane Meaders” and “upon [Jane’s] death, work was gifted to Paul L. Meaders III and his sister Phyliss Meaders Hurley.”[21] Then on January 26, 2016, Paul sold the Work to Helwaser for $277,500.[22]

Around October 11, 2016, Helwaser sold the Work to a third-party buyer.[23] Several months later, Phyliss learned of Paul’s sale of the Work to Helwaser.[24] On March 7, 2018, Phyliss demanded that Helwaser return the Work.[25] Helwaser suggested that Phyliss withdraw her demands.[26]

On June 18, 2018,[27] Phyliss filed a claim for conversion and unjust enrichment against Helwaser, Helwaser Gallery, and Helwaser Fine Art in the United States Southern District Court of New York.[28] Phyliss, a resident of Massachusetts, filed her complaint against Helwaser, a resident of New York, claiming that she was entitled to half of the Work’s sale price plus damages, which would be at least $138,750.[29] Therefore, under 28 U.S.C. §1332(a)(2), Phyliss’ diversity claim was filed under the jurisdiction of federal court.[30]

In her complaint, Phyliss argued that Helwaser was insufficiently diligent and should have known that Paul was only part-owner of the Work and therefore did not have full authority to sell it without Phyliss’s permission.[31] Helwaser filed an answer on August 10, 2018, moving for summary judgment on all of Phyliss’ claims.[32] Helwaser argued that Phyliss did not have any ownership in the Work, and if she did, Helwaser was not liable because they reasonably and in good faith relied on Paul’s assertion of sole ownership over the Work.[33]

After almost two and a half years of litigation between the parties, Judge P. Kevin Castel of the Southern District of New York granted Helwaser’s motion for summary judgment for the following reasons discussed below.

New York Estate Distribution

The decedent’s assets, property and possessions make up their estate.[34] If a decedent dies with a will, then such will is admitted to probate in order to determine whether it is valid.[35] The probate process is not uniform federal law, but varies by state.[36] In New York, the probate process occurs in the Surrogate Court.[37] New York’s probate process has an extensive notice requirement whereby all interested persons, beneficiaries, and heirs at law are notified of the probate proceeding.[38]

Upon the decedent’s death, an executor is either nominated by will or by Surrogate Court.[39] Once appointed, the executor must first collect the decedent’s estate. After estate collection, the executor pays off the decedent’s taxes and expenses with the estate. The remainder of the estate is distributed to the beneficiaries according to the decedent’s will, which serves as a guideline to the distribution powers an executor has.

An executor has “a fiduciary duty to act in the best interests of the estate and its beneficiaries.”[40] An executor therefore must manage the distribution of the estate within the powers granted by decedent in his or her will.[41] If an executor fails to meet this duty, by acting in his own interests or allowing assets to decay, such executor may face legal liability.[42]

Discussion

Paul, as executor, did not breach his fiduciary duty to Phyliss.

Under Jane’s will, Paul was one of the named beneficiaries.[43] Jane gave Paul and Phyliss her residuary estate, which was to be divided in “equal shares” between them.[44] Because the Work was not specifically given to another beneficiary, the Work became part of Jane’s residuary estate.[45]

In addition to being a beneficiary, Jane also nominated Paul as executor of her estate. Jane gave Paul as executor “broad discretion… to make distributions in cash or in specific property, real or personal, or an undivided interest therein.”[46] The Court determined that Paul could equally distribute the Work, as part of the residuary estate, between him and Phyliss in one of the following ways: (1) “sell the Work and distribute the proceeds in equal shares to Phyliss and himself,” (2) “distribute the Work to Phyliss and give himself a credit for one-half of the appraised value of the Work at the time of distribution,” or (3) “distribute the Work to himself and grant to Phyliss a credit of one-half the appraised value of the Work at the time of distribution.”[47]

Paul chose the third option and took possession of the Work, which was appraised at $30,000.[48] During distribution, Phyliss technically owned half of the Work and was therefore entitled to $15,000. With his broad discretion, Paul upheld equal distribution of Jane’s residuary estate by distributing to Phyliss $15,000 worth of other property or cash in Jane’s residuary estate.[49]

Paul’s distribution of Jane’s estate was completed by July 23, 2002.[50] Within Phyliss’ complaint, she argued that Paul breached his fiduciary duty by distributing Jane’s residuary estate disproportionately for his own benefit.[51] The Court shifted the burden of proof onto Phyliss to prove that an “unequal” distribution of Jane’s residuary estate occurred, and Phyliss was unable to provide any evidence or accounting to overcome this burden.[52] The Court therefore concluded that Paul did not breach his fiduciary duty to Phyliss.[53]

Phyliss did not have any ownership interest in the Work after Jane’s estate was distributed and closed.

The Court determined that Phyliss did not have ownership interest in the Work after Jane’s estate was distributed and closed for several reasons. To begin, Phyliss attempted to argue that her ownership interest was established by the Work’s provenance submitted by Paul because it included Phyliss’ name as the “owner” of the gift.[54] An artwork’s provenance is “its history or at least part of the history of the piece’s path from the hand’s of the artist to those of the present owner.”[55] The Court determined that Phyliss was included in the Work’s provenance because she had a “beneficial interest in the Work until the executor exercised his discretion to distribute the Work to himself or to otherwise sell it.”[56] Therefore, the Work’s provenance was not conclusive evidence of Phyliss’ ownership interest.

Additionally, Phyliss was unable to prove that she owned anything more than a “beneficial interest” in the Work.[57] Beneficial interest is interest “which could have been satisfied by the provision of one-half of the Work’s appraised value on the date of distribution.”[58] Phyliss failed to prove any ownership interest in the Work through the production of any Surrogate filing, accounting, or inventory.[59] Phyliss also did not allege an oral agreement or even a conversation with Paul in regards to the ownership of the Work, which would have at least reflected an intention to have ownership or joint ownership in the Work upon distribution.[60] Because mere beneficial interest does not prove ownership in property, the Court concluded that Phyliss did not have an ownership interest in the Work.

The Court further concluded that Phyliss’ failure to establish ownership while the Work was in Paul’s possession for almost 15 years indicates that Phyliss did not have anything more than beneficial interest.[61] Although Phyliss knew the Work existed while Paul was distributing Jane’s estate, Phyliss did not show any initiative to claim ownership over the Work, such as “cleaning, caring for, taking custody of, displaying, insuring, or initiating legal action related to the Work.”[62] Additionally, even after Paul emailed Phyliss in January 2015 and gave her notice that he was considering selling the Work, and Phyliss still took no action until almost two years later, after the Work was already sold to Helwaser for almost nine times its appraised price.[63]

Furthermore, because Phyliss failed to prove that she owned anything more than a beneficial interest in the Work, the Court concluded that Phyliss did not have any ownership in the Work after Jane’s estate was distributed.[64] The Court therefore granted summary judgment in favor of Helwaser and struck down all of Phyliss’ claims against Helwaser and Paul.[65]

Takeaways

The express words of a will admitted to probate provides critical guidelines for estate distribution. Well drafted wills lay out who gets what and how much power the executor has in distributing the decedent’s estate. In Meaders v. Helwaser, Jane’s will expressly gave Paul broad discretion as executor to distribute Jane’s residuary estate in “equal shares” between Paul and Phyliss. Although Paul’s discretion was not unlimited, under broad discretion, Paul was able to choose which property he wished to possess, so long as the residuary estate was divided equally in value.

Another key takeaway from Meaders v. Helwaser is that an artwork’s provenance created by will does not, by itself, establish ownership interest. The Court concluded that although the Work’s provenance included both Paul and Phyliss’ names, this alone established only beneficial interest. Beneficial interest is a mere expectancy and not ownership interest.

Next, a beneficiary’s timing in asserting ownership over probated property during estate distribution is critical. Phyliss’ passivity with the Work during distribution and for another 15 years after distribution led to her detriment in establishing a claim for ownership.

Lastly, aggrieved beneficiaries should first pursue the executor of an estate, and not third party purchasers.[66] Because Phyliss filed a claim against Helwaser (third party purchaser), the Court could not make its decision without first determining whether Paul breached his fiduciary duty as executor in distributing Jane’s estate first. Therefore, if Phyliss had initially filed a claim against Paul, she likely would have saved time and money. Due to the numerous layers within this case, Meaders v. Helwaser persisted for almost two years, serving as a reminder of the complex issues that can arise out of estates that include artworks.[67]


Endnotes:

  1. Who Is Alexander Calder? Tate, https://www.tate.org.uk/art/artists/alexander-calder-848/who-is-alexander-calder#:~:text=Alexander%20Calder%2C%20known%20to%20many,an%20American%20sculptor%20from%20Pennsylvania.&text=Alexander%20Calder%20is%20known%20for,and%20suspension%20in%20the%20air.
  2. Lynne Warren, Alexander Calder, Encyclopedia Britannica (last visited May 29, 2020), https://www.britannica.com/biography/Alexander-Calder.
  3. Amended Verified Complaint at 4, ¶16-17. Meaders v. Helwaser, No. 18-cv-5039-PKC, 2020 WL 469879 (S.D.N.Y. Jan. 29, 2020) [hereinafter Complaint].
  4. Id. at 1, ¶1.
  5. Id. at 4, ¶17.
  6. Meaders, 2020 WL 469879 at 1.
  7. Id.
  8. Complaint at 4, ¶18.
  9. Id. at 4.
  10. Meaders, 2020 WL 469879 at 1.
  11. Id.
  12. Id. at 2.
  13. Id.
  14. Id. at 4.
  15. Id. at 2.
  16. Id.
  17. Id.
  18. Id.
  19. Id.
  20. Verified Answer, Affirmative Defenses, and Third-Party Complaint at 11, ¶ 2. Meaders v. Helwaser, No. 18-cv-5039-PKC, 2020 WL 469879 (S.D.N.Y. Jan. 29, 2020) [hereinafter Answer].
  21. Id. at 15, ¶ 26.
  22. Id.
  23. Id. at 16, ¶ 37.
  24. Complaint at 7, ¶44.
  25. Id. at 8, ¶45.
  26. Id. at 8, ¶46.
  27. Id. at 1.
  28. Meaders, 2020 WL 469879 at 1.
  29. Complaint, at 3, ¶11.
  30. Id.
  31. Kate Lucas, Grossman LLP Achieves Summary Judgment Victory on Behalf of Helwaser Gallery in Dispute Over Calder Stabile, Grossman LLP (Jan. 30, 2020), https://www.grossmanllp.com/Grossman-LLP-Achieves-Summary-Judgment-Victorynbs.
  32. Meaders, 2020 WL 469879 at 1.
  33. Answer at 9.
  34. Paul Chazan, Probate Proceeding, New York City Bar (Oct. 2018), https://www.nycbar.org/get-legal-help/article/wills-trusts-and-elder-law/probate-proceeding/.
  35. Id.
  36. Probate Process, American Bar Association, https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/the_probate_process/.
  37. Chazan, supra note 34.
  38. Id.
  39. Id.
  40. The Duties of an Executor, JUSTIA (Oct. 2018), https://www.justia.com/estate-planning/the-duties-of-an-executor/#:~:text=An%20executor%20has%20a%20fiduciary,in%20the%20estate%20to%20decay.
  41. Id.
  42. Id.
  43. Meaders, 2020 WL 469879 at 1.
  44. Id.
  45. Lucas, supra note 31.
  46. Meaders, 2020 WL 469879 at 3.
  47. Id.
  48. Id. at 4.
  49. Id. at 3; see also N.Y. Est. Powers & Trusts Laws § 11-1.1(b)(20)(2012).
  50. Meaders, 2020 WL 469879 at 4.
  51. Id.
  52. Id.
  53. Id.
  54. Answer at 15, ¶ 26.
  55. Meaders, 2020 WL 469879 at 5; see also DeWeerth v. Baldinger, 836 F.2d 103, 112 (2d Cir. 1987).
  56. Meaders, 2020 WL 469879 at 5.
  57. Id. at 4.
  58. Id.
  59. Id.
  60. Id. at 5.
  61. Id.
  62. Id.
  63. Id.
  64. Id. at 6.
  65. Id.
  66. Estate Dispute Over Calder Sculpture, Probate Stars (Feb. 1, 2020), https://probatestars.com/estate-dispute-over-calder-sculpture/.
  67. Lucas, supra note 31.

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About the Author: Sara Osinski (NYLS Class of 2021) served as a Spring 2020 Intern at the Center for Art Law. She earned her undergraduate degree in politics and law from Bryant University. She can be reached at sara.osinski@law.nyls.edu.