     11-4042-cv
     Bakalar v. Vavra

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Daniel Patrick Moynihan
 3       United States Courthouse, 500 Pearl Street, in the City of
 4       New York, on the 11th day of October, two thousand twelve.
 5
 6       PRESENT: DENNIS JACOBS,
 7                              Chief Judge,
 8                ROBERT D. SACK,
 9                              Circuit Judge,
10                JOHN GLEESON,
11                              District Judge.*
12
13       - - - - - - - - - - - - - - - - - - - -X
14       DAVID BAKALAR,
15                Plaintiff-Counter-Defendant-
16                Third-Party-Defendant-
17                Appellee,
18
19                      -v.-                                             11-4042-cv
20
21       MILOS VAVRA, LEON FISCHER,
22                Defendants-Counter-
23                Claimants-Appellants.
24       - - - - - - - - - - - - - - - - - - - -X

                *
               The Honorable John Gleeson, United States District
         Judge for the Eastern District of New York, sitting by
         designation.
                                                  1
 1
 2   FOR APPELLANT:             Raymond J. Dowd, Luke McGrath,
 3                              Thomas V. Marino, Dunnington,
 4                              Bartholow & Miller LLP, New
 5                              York, NY.
 6
 7   FOR APPELLEES:             William L. Charron, Pryor
 8                              Cashman LLP, New York, NY.
 9
10        Appeal from a judgment of the United States District
11   Court for the Southern District of New York (Pauley III,
12   J.).
13
14        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
15   AND DECREED that the judgment of the district court be
16   AFFIRMED.
17
18        This is an ownership dispute concerning a 1917 drawing
19   by Egon Schiele (the “Drawing”), between David Bakalar, who
20   seeks a declaration that he owns it by purchase from a
21   dealer, and Milos Vavra and Leon Fischer, who are heirs of
22   Austrian cabaret performer, Fritz Grunbaum, who owned it
23   before he was murdered by the Nazis in 1941. The United
24   States District Court for the Southern District of New York
25   (Pauley III, J.) awarded judgment to Bakalar on the basis of
26   laches. Bakalar v. Vavra, 819 F. Supp.2d 293, 307 (S.D.N.Y.
27   2011). “Following a bench trial, we set aside findings of
28   fact only when they are clearly erroneous . . . . However,
29   we review de novo the district court's conclusions of law
30   and its resolution of mixed questions of law and fact.”
31   Phansalkar v. Andersen Weinroth & Co., L.P., 344 F.3d 184,
32   199 (2d Cir. 2003) (citations omitted). We assume the
33   parties’ familiarity with the underlying facts, the
34   procedural history, and the issues presented for review.
35
36        [1] In a title action under New York law, a good faith
37   purchaser of an artwork has the burden of proving that the
38   work was not stolen. Bakalar v. Vavra, 619 F.3d 136, 147
39   (2d Cir. 2010) (citing Solomon R. Guggenheim Found. v.
40   Lubell, 77 N.Y.2d 311, 321 (1991)). Here, the district
41   court found that the Drawing was not looted by the Nazis.
42   Bakalar, 819 F. Supp. 2d at 298-99. Vavra and Fischer argue
43   that the district court’s finding is clearly erroneous and
44   that the Nazis stole the Drawing. However, Bakalar traced

                                  2
 1   the provenance back to Mathilde Lukacs, Grunbaum’s sister-
 2   in-law, who sold it to a gallery in 1956. Vavra and
 3   Fischer’s hypothesis--that the Nazis stole the Drawing from
 4   Grunbaum only to subsequently return or sell it to his
 5   Jewish sister-in-law--does not come close to showing that
 6   the district court’s finding was clearly erroneous.
 7
 8        After finding that the Drawing was not stolen by the
 9   Nazis, the district court extended its Lubell analysis by
10   requiring Bakalar to show that Lukacs acquired proper title
11   in the Drawing, and found that he could not. Bakalar, 819
12   F. Supp. 2d at 299-302. We do not decide whether Bakalar
13   discharged his burden under Lubell by tracing the provenance
14   back to Lukacs, who was a close relative of Grunbaum (she
15   was sister to Mrs. Grunbaum, who survived Grunbaum before
16   herself being murdered by the Nazis). The point was not
17   pressed by Bakalar, and we affirm instead on the district
18   court’s ruling that the claim against Bakalar is defeated by
19   laches.
20
21        This Court previously recognized that Bakalar could
22   assert a laches defense under New York law. See Bakalar,
23   619 F.3d at 147. In order to prevail on laches, Bakalar had
24   to show that “(1) [Vavra and Fischer] were aware of their
25   claim [to the Drawing], (2) they inexcusably delayed in
26   taking action, and (3) Bakalar was prejudiced as a result.”
27   Bakalar, 819 F. Supp. 2d at 303 (citing Ikelionwu v. United
28   States, 150 F.3d 233, 237 (2d Cir. 1998)). The district
29   court found that Vavra and Fischer’s “ancestors were aware
30   of--or should have been aware of--their potential intestate
31   rights to Grunbaum property,” and that the ancestors “were
32   not diligent in pursuing their claims to the Drawing.” Id.
33   at 305-06.
34
35        Vavra and Fischer contend that the district court
36   committed two errors of law bearing on the laches defense.
37   First, they argue that the court erroneously “imputed
38   knowledge of ‘potential intestate rights’ to [Vavra and
39   Fischer] based upon previous actions or inactions of other
40   family members.” But it was obviously necessary for the
41   court to do just that; the alternative was to reset the
42   clock for each successive generation. See Bakalar, 819 F.
43   Supp. 2d at 303 ("This inquiry focuses not only on efforts
44   by the party to the action, but also on efforts by the

                                  3
 1   party's family.") (internal quotation omitted). Second,
 2   Vavra and Fischer argue that their families had no legal
 3   duty of diligence until they knew of the actual location of
 4   the Drawing. They rely on language in Lubell declining to
 5   “impose the additional duty of diligence before the true
 6   owner has reason to know where its missing chattel is to be
 7   found.” 77 N.Y.2d at 320. However, though “[l]ack of
 8   diligence in locating the property” is not a consideration
 9   for a statute of limitations analysis, it is absolutely
10   relevant “with respect to a laches defense.” SongByrd, Inc.
11   v. Estate of Grossman, 206 F.3d 172, 182 (2d Cir. 2000)
12   (citing Lubell, 77 N.Y.2d at 321).
13
14        Vavra and Fischer’s factual arguments are no more
15   persuasive. Their theories about what their ancestors knew
16   (or didn’t know) are speculative, and we do not have a
17   “‘definite and firm conviction that a mistake has been
18   committed.’” Mobil Shipping & Transp. Co. v. Wonsild Liquid
19   Carriers Ltd., 190 F.3d 64, 67-68 (2d Cir. 1999) (quoting
20   Anderson v. Bessemer City, 470 U.S. 564, 574 (1985)).
21
22        Next, Vavra and Fischer contest whether Bakalar was
23   prejudiced by their ancestors’ delay in pursuing the
24   Drawing. There can be no serious dispute that the deaths of
25   family members--Lukacs and others of her generation, and the
26   next--have deprived Bakalar of key witnesses. See Sanchez
27   v. Trustees of the Univ. of Pa., 2005 WL 94847, *3 (S.D.N.Y.
28   Jan. 18, 2004) (noting that the death of potential witnesses
29   is prejudicial) (citing Solomon R. Guggenheim Found. V.
30   Lubell, 153 A.D.2d 143, 149 (1st Dep’t 1990)). And while a
31   “defendant's vigilance is as much in issue as [a]
32   plaintiff's diligence,” Lubell, 153 A.D.2d at 152, Vavra and
33   Fischer’s speculation has not established clear error in the
34   district court’s finding that Bakalar, a good faith
35   purchaser, was prejudiced by the delay. See Bakalar, 819 F.
36   Supp. 2d at 306-07.
37
38        In sum, there is no clear error in the findings that
39   Vavra and Fischer’s ancestors knew or should have known of a
40   potential claim to the Drawing, that they took no action in
41   pursuing it, and that Bakalar was prejudiced in this
42   litigation as a result of that delay. It was therefore
43   sound to recognize Bakalar’s title on the basis of his
44   laches defense.

                                  4
 1        [2] Citing little authority, Vavra and Fischer argue
 2   that the district court should have permitted them to
 3   supplement the record with additional expert testimony on
 4   remand. They misconstrue this Court’s remand instruction
 5   that the district court could reopen discovery to mean that
 6   it was required to do so. See Bakalar, 619 F.3d at 147
 7   (“[W]e vacate the judgment of the district court and remand
 8   the case for further proceedings, including, if necessary, a
 9   new trial.”) (emphasis added). See also Int’l Star Class
10   Yacht Racing Ass’n v. Tommy Hilfiger U.S.A., Inc., 146 F.3d
11   66, 73 (2d Cir. 1998) (“The decision whether to hear
12   additional evidence on remand is within the sound discretion
13   of the trial court judge.”). The district court granted a
14   six month extension for expert discovery before trial, but
15   Vavra and Fischer failed to meet the revised deadline. See
16   Bakalar v. Vavra, 851 F. Supp. 2d 489, at 491-92 (S.D.N.Y.
17   2011). The district court did not abuse its discretion in
18   abiding by its discovery calendar, especially in light of
19   its generous extension.
20
21        Finding no merit in Vavra and Fischer’s remaining
22   arguments, we hereby AFFIRM the judgment of the district
23   court.
24
25
26                              FOR THE COURT:
27                              CATHERINE O’HAGAN WOLFE, CLERK
28




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