Locke Lord QuickStudy: The Interplay between the HEAR Act’s Statute of Limitations and the Equitable Defense of Laches: A Just and Fair Solution

Locke Lord LLP
March 4, 2020

On March 2, 2020, the Supreme Court denied the petition for writ of certiorari filed in Laurel Zuckerman, as Ancillary Adminstratrix of the Estate of Alice Leffmann v. The Metropolitan Museum of Art.  At issue was whether the Holocaust Expropriated Art Recovery Act (the “HEAR Act”) preempts the equitable defense of laches. 

In 2016, Congress enacted the HEAR Act which is designed to provide victims of the Holocaust persecution and their heirs an opportunity to recover Nazi-confiscated art. Central to the HEAR Act’s purpose is a statute of limitations providing, in pertinent part:  

Notwithstanding any other provision of Federal or State law or any defense at law relating to the passage of time, and except as otherwise provided in this section, a civil claim or cause of action against a defendant to recover any artwork or other property that was lost during the covered period [January 1, 1933 and ending December 31, 1945] because of Nazi persecution may be commenced not later than 6 years after the actual discovery by the claimant or the agent of the claimant of 

(1) the identity and location of the artwork or other property; and 

(2) a possessory interest of the claimant in the artwork of other property.

Section 5(a) of the HEAR Act.
Paul and Alice Leffmann, who resided in Germany, were the original owners of Picasso’s The Actor.  With the rise of the Third Reich, the Leffmann’s fled to Italy in 1937.  Italy, like Germany, soon began anti-Semitic policies and physical persecution of Jews. In an effort to flee continual persecution, Mr. Leffmann sold the The Actor at a “fire sale” price in order to fund the Leffmanns’ flight, first to Switzerland and ultimately to Brazil where they remained until the Allied victory.

In 1952, the Metropolitan Museum of Art ("The Met") accepted the painting as a donation from Thelma Chrysler Foy where it remains to this day.  The history of The Actor between the time of the Leffmanns’ sale and the donation remains unclear. 

In 2016, the Leffmanns’ great-grandniece, Laurel Zuckerman, brought an action to recover The Actor on behalf of the estate of Alice Leffmann, the sole heir of Paul Leffmann.  Ms. Zuckerman alleged in the District Court for the Southern District of New York that the Leffmanns sold the painting under duress, thereby making the sale void and that the action was brought within the statute of limitations prescribed by the HEAR Act. Ms. Zuckerman sought return of the painting, monetary damages and a declaration that the estate of Alice Leffmann was the painting’s rightful owner.  

The District Court held that Ms. Zuckerman had failed to adequately allege duress under New York law and dismissed the complaint.  Ms. Zuckerman appealed.  On appeal, The Met argued that Ms. Zuckerman’s claims were barred by the doctrine of laches and that such a determination could be made on the pleadings. The Second Circuit agreed, noting that “[l]aches is an equitable defense available to a defendant who can show ‘that the plaintiff has inexcusably slept on [its] rights so as to a make a decree against the defendant unfair,’ and that the defendant ‘has been prejudiced by the plaintiff’s unreasonable delay in bringing the action.’” 

Certain facts were key to the Second Circuit’s decision: the painting was a significant work by a celebrated artist, it was sold for a substantial sum of money to a well-known French art dealer, it had been in The Met’s collection since 1952 and neither the Leffmanns nor their heirs made any demand for the painting until 2010. Conducting a state-law laches analysis, the Second Circuit held that there had been an unreasonable delay in bringing the claim and that The Met “has been prejudiced by the more than six decades that have lapsed since the end of World War II” because there were no witnesses who could testify as to the whether the Leffmann’s sale was voluntary or involuntary or  provide testimony in support of The Met’s affirmative defense of good faith.  The Second Circuit also held that HEAR Act’s statute of limitations did not preempt the laches defense because the statute explicitly refers only to “defense[s] at law relating to the passage of time.” 

In support of this holding, the Court observed: 

One of the stated purposes of the HEAR Act is to ensure that claims to recover art lost in the Holocaust era are ‘resolved in a just and fair manner.’ HEAR Act § 3(20). But the HEAR Act does not allow potential claimants to wait indefinitely to be bring a claim.  To do so would be neither just nor fair.  At the very core of a successful laches defense is prejudice to the defending party; even unreasonable delay is not fatal to a claim if there is been no harm to the other party. Unlike a mechanical application of a statute of limitations, a laches defense requires a careful analysis of the respective positions of the parties in search of a just and fair solution.