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Round Three: Grosz v. MOMA Decision Petitioned for Rehearing and/or Rehearing En Banc

On December 16, 2010, New York Court of Appeals affirmed holding in Grosz v. MoMA that the three-year statute of limitations had passed by the time suit was brought denying plaintiff’s equitable tolling claim.  Works in dispute, currently at the Museum of Modern Art in New York, include Hermann-Neisse with Cognac, Self-Portrait with Model, and Republican Automatons all by a German painter George Grosz.  Conditions of acquisition are undisputed whereas MoMA is seen as an innocent purchaser of stolen goods.

Under New York State Law, “[a]n innocent purchaser of stolen goods becomes a wrongdoer only after refusing the owner’s demand for their return.” The contention is whether MoMA refused to return the paintings to the claimants in satisfaction of the “demand and refusal” rule or not. All parties agree that MoMA refused to return the works, yet they disagree as to the time of the refusal. Petitioners contend that MoMA did not refuse until 2006, while the Disrict Court found that “constructive refusal” took place on July 20, 2005.  Correspondence between the claimants and the museum, submitted as evidence, shows that negotiations between the parties were protracted and open-ended generating confusion as to the true intentions of the museum trustees.

Proponents of restitution on the merits, such as the Commission for Art Recovery, believe that this decision “may be a departure from previous New York art-recovery cases that hinged on the statute of limitations defense. The “New York rule” (set out in Menzel v. List, a NY decision from the 1960s) requires that a suit to recover stolen property be filed within three years of the original owner discovering its whereabouts, demanding its return, and being refused. Subsequent cases in New York courts and in Federal Courts in the state have tested and clarified many aspects of this rule.”

On December 29, 2010, plaintiffs filed a petition for rehearing and hearing en banc alleging that the trial court’s reasoning and the court of appeal’s ruling confuse the well-settled understanding of “what behavior constitues a “refusal.”” Specifically, the claim for rehearing states that Court of Appeals Panel “turned New York’s “demand and refusal” doctrine on its head, permitting misleading behavior by a possessor of stolen property to cause a forfeiture of the true owners’ rights.”