The application of the statute of limitations often presents parties seeking to recover art, jewelry, or other property with a significant hurdle. Recently, a New York federal court dealt with this tricky issue in Grosz v. Museum of Modern Art.

George Grosz was an early twentieth-century German artist, and his artwork was strongly anti-totalitarian and therefore anti-Nazi. As such, in 1933 he was forced to flee Germany as Hitler ascended to power. The Third Reich branded Grosz an “enemy of the state” and the government confiscated his assets, including some artwork. Ultimately, three of those works were obtained by the Museum of Modern Art, and his estate sued MoMa for the return of the works.

MoMa moved to dismiss, citing the State of Limitations. In New York, an action to recover chattel generally must be commenced with three years. Interestingly, under New York law, the statute of limitations for conversion and replevin automatically begins to run against a bad faith possessor on the date of the theft or bad faith acquisition — even if the true owner is unaware the chattel is missing. On the other hand, when an innocent purchaser is involved, pursuant to the “demand and refusal rule” the statute of limitations begins when the purchaser refuses the original owner’s demand for the return of the property.

In Grosz, the Court analyzed the dealings between the estate and MoMa to determine when the “refusal” occurred in response to a demand letter from the estate of November 24, 2003. There was a continued back and forth in correspondence between the parties; plaintiffs pointed to an April 12, 2006 letter, when MoMA notified plaintiff that its Board of Trustees had voted that the museum had no obligation to return the works; MoMa instead cited to a July 20, 2005 letter, in which it expressed its disagreement with plaintiff’s claims that the works must be returned.

The Court agreed with MoMa, even though the July 20, 2005, letter contained “temporizing language” that urged continued discussions. The Court found that language was designed to entice plaintiffs to continue negotiating and to prevent the dispute from becoming public or escalating into litigation, and ultimately did not change the defendant’s position set forth in the letter that indicated it would not — at least at that point — return the works. In applying the statute of limitations, the plaintiff’s claims were time-barred and the Complaint was dismissed.

As discussed in the article linked below, this Fall the US Supreme Court will decide whether it will hear this case.