*The Honorable John Gleeson, United States District Judge for the Eastern District of New York, sitting by designation.

1 11-4042-cv Bakalar v. Vavra



### UNITED STATES COURT OF APPEALS **FOR THE SECOND CIRCUIT**



## SUMMARY ORDER

**R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT**  **. C**  **ITATION TO A SUMMARY ORDER FILED**
**ON OR AFTER J** **ANUARY 1,**  **2007, IS PERMITTED AND IS GOVERNED BY**  **F EDERAL**  **R ULE OF**  **A PPELLATE**  **P ROCEDURE**  **32.1 AND THIS COURT**  **’ S**  **L OCAL**  **R ULE**  **32.1.1. W**  **HEN CITING A SUMMARY ORDER IN A**
**DOCUMENT FILED WITH THIS COURT ,**  **A PARTY MUST CITE EITHER THE F** **EDERAL A** **PPENDIX 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 .** 
**At a stated term of the United States Court of Appeals** 1 **for the Second Circuit, held at the Daniel Patrick Moynihan** 2 **United States Courthouse, 500 Pearl Street, in the City of** 3 **New York, on the 11 th** **day of October, two thousand twelve.** 4 5 **PRESENT: DENNIS JACOBS,** 6 **Chief Judge ,**  7 **ROBERT D. SACK,** 8 **Circuit Judge ,**  9 **JOHN GLEESON,** 10 **District Judge**

**.** ***** 11 12
- - - - - - - - - - - - - - - - - - - -X 13 **DAVID BAKALAR,** 14 **Plaintiff-Counter-Defendant** 15 **Third-Party-Defendant** 16 **Appellee ,**  17 18 **-v.- 11-4042-cv** 19 20 **MILOS VAVRA, LEON FISCHER,** 21 **Defendants-Counter** 22 **Claimants-Appellants**

**.** 23
- - - - - - - - - - - - - - - - - - - -X 242 1 **FOR APPELLANT:** Raymond J. Dowd, Luke McGrath, 2 Thomas V. Marino, Dunnington, 3 Bartholow & Miller LLP, New 4 York, NY. 5 6 **FOR APPELLEES:** William L. Charron, Pryor 7 Cashman LLP, New York, NY. 8 9 Appeal from a judgment of the United States District 10 Court for the Southern District of New York (Pauley III, 11 J. ). 12 13 **UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED** 14 **AND DECREED**that the judgment of the district court be 15
**AFFIRMED**

. 16 17 This is an ownership dispute concerning a 1917 drawing 18 by Egon Schiele (the “Drawing”), between David Bakalar, who 19 seeks a declaration that he owns it by purchase from a 20 dealer, and Milos Vavra and Leon Fischer, who are heirs of 21 Austrian cabaret performer, Fritz Grunbaum, who owned it 22 before he was murdered by the Nazis in 1941. The United 23 States District Court for the Southern District of New York 24 (Pauley III, J .) awarded judgment to Bakalar on the basis of 25 laches. Bakalar v. Vavra , 819 F. Supp.2d 293, 307 (S.D.N.Y. 26 2011). “Following a bench trial, we set aside findings of 27 fact only when they are clearly erroneous . . . . However, 28 we review de novothe district court's conclusions of law 29 and its resolution of mixed questions of law and fact.” 30 Phansalkar v. Andersen Weinroth & Co., L.P. , 344 F.3d 184, 31 199 (2d Cir. 2003) (citations omitted). We assume the 32 parties’ familiarity with the underlying facts, the 33 procedural history, and the issues presented for review. 34 35 **[1]** In a title action under New York law, a good faith 36 purchaser of an artwork has the burden of proving that the 37 work was not stolen. Bakalar v. Vavra , 619 F.3d 136, 147 38 (2d Cir. 2010) (citing Solomon R. Guggenheim Found. v. 39 Lubell , 77 N.Y.2d 311, 321 (1991)). Here, the district 40 court found that the Drawing was not looted by the Nazis. 41 Bakalar , 819 F. Supp. 2d at 298-99. Vavra and Fischer argue 42 that the district court’s finding is clearly erroneous and 43 that the Nazis stole the Drawing. However, Bakalar traced 443the provenance back to Mathilde Lukacs, Grunbaum’s sister1 in-law, who sold it to a gallery in 1956. Vavra and 2 Fischer’s hypothesis--that the Nazis stole the Drawing from 3 Grunbaum only to subsequently return or sell it to his 4 Jewish sister-in-law--does not come close to showing that 5 the district court’s finding was clearly erroneous. 6 7 After finding that the Drawing was not stolen by the 8 Nazis, the district court extended its Lubell analysis by 9 requiring Bakalar to show that Lukacs acquired proper title 10 in the Drawing, and found that he could not. Bakalar , 819 11 F. Supp. 2d at 299-302. We do not decide whether Bakalar 12 discharged his burden under Lubell by tracing the provenance 13 back to Lukacs, who was a close relative of Grunbaum (she 14 was sister to Mrs. Grunbaum, who survived Grunbaum before 15 herself being murdered by the Nazis). The point was not 16 pressed by Bakalar, and we affirm instead on the district 17 court’s ruling that the claim against Bakalar is defeated by 18 laches. 19 20 This Court previously recognized that Bakalar could 21 assert a laches defense under New York law. See Bakalar
, 22 619 F.3d at 147. In order to prevail on laches, Bakalar had 23 to show that “(1) [Vavra and Fischer] were aware of their 24 claim [to the Drawing], (2) they inexcusably delayed in 25 taking action, and (3) Bakalar was prejudiced as a result.” 26 Bakalar , 819 F. Supp. 2d at 303 (citing Ikelionwu v. United 27 States , 150 F.3d 233, 237 (2d Cir. 1998))

. The district 28 court found that Vavra and Fischer’s “ancestors were aware 29 of--or should have been aware of--their potential intestate 30 rights to Grunbaum property,” and that the ancestors “were 31 not diligent in pursuing their claims to the Drawing.” Id

. 32 at 305-06. 33 34 Vavra and Fischer contend that the district court 35 committed two errors of law bearing on the laches defense. 36 First, they argue that the court erroneously “imputed 37 knowledge of ‘potential intestate rights’ to [Vavra and 38 Fischer] based upon previous actions or inactions of other 39 family members.” But it was obviously necessary for the 40 court to do just that; the alternative was to reset the 41 clock for each successive generation. See Bakalar , 819 F. 42 Supp. 2d at 303 ("This inquiry focuses not only on efforts 43 by the party to the action, but also on efforts by the 444 party's family.") (internal quotation omitted). Second, 1 Vavra and Fischer argue that their families had no legal 2 duty of diligence until they knew of the actual locationof 3 the Drawing. They rely on language in Lubell declining to 4 “impose the additional duty of diligence before the true 5 owner has reason to know where its missing chattel is to be 6 found.” 77 N.Y.2d at 320. However, though “[l]ack of 7 diligence in locating the property” is not a consideration 8 for a statute of limitations analysis, it is absolutely 9 relevant “with respect to a laches defense.” SongByrd, Inc. 10 v. Estate of Grossman , 206 F.3d 172, 182 (2d Cir. 2000) 11 (citing Lubell , 77 N.Y.2d at 321). 12 13 Vavra and Fischer’s factual arguments are no more 14 persuasive. Their theories about what their ancestors knew 15 (or didn’t know) arespeculative, and we do not have a 16 “‘definite and firm conviction that a mistake has been 17 committed.’” Mobil Shipping & Transp. Co. v. Wonsild Liquid 18 Carriers Ltd. , 190 F.3d 64, 67-68 (2d Cir. 1999) (quoting 19 Anderson v. Bessemer City , 470 U.S. 564, 574 (1985)). 20 21 Next, Vavra and Fischer contest whether Bakalar was 22 prejudiced by their ancestors’ delay in pursuing the 23 Drawing. There can be no serious dispute that the deaths of 24 family members--Lukacs and others of her generation, and the 25 next--have deprived Bakalar of key witnesses. See Sanchez 26 v. Trustees of the Univ. of Pa. , 2005 WL 94847, *3 (S.D.N.Y. 27 Jan. 18, 2004) (noting that the death of potential witnesses 28 is prejudicial) (citing Solomon R. Guggenheim Found. V. 29 Lubell , 153 A.D.2d 143, 149 (1st Dep’t 1990)). And while a 30 “defendant's vigilance is as much in issue as [a] 31 plaintiff's diligence,” Lubell , 153 A.D.2d at 152, Vavra and 32 Fischer’s speculation has not established clear error in the 33 district court’s finding that Bakalar, a good faith 34 purchaser, was prejudiced by the delay. See Bakalar , 819 F. 35 Supp. 2d at 306-07. 36 37 In sum, there is no clear error in the findings that 38 Vavra and Fischer’s ancestors knew or should have known of a 39 potential claim to the Drawing, that they took no action in 40 pursuing it, and that Bakalar was prejudiced in this 41 litigation as a result of that delay. It was therefore 42 sound to recognize Bakalar’s title on the basis of his 43 laches defense. 445 **[2]** Citing little authority, Vavra and Fischer argue 1 that the district court should have permitted them to 2 supplement the record with additional expert testimony on 3 remand. They misconstrue this Court’s remand instruction 4 that the district court couldreopen discovery to mean that 5 it was required to do so. See Bakalar , 619 F.3d at 147 6 (“[W]e vacate the judgment of the district court and remand 7 the case for further proceedings, including, if necessary , a 8 new trial.”) (emphasis added). See also Int’l Star Class 9 Yacht Racing Ass’n v. Tommy Hilfiger U.S.A., Inc. , 146 F.3d 10 66, 73 (2d Cir. 1998) (“The decision whether to hear 11 additional evidence on remand is within the sound discretion 12 of the trial court judge.”). The district court granted a 13 six month extension for expert discovery before trial, but 14 Vavra and Fischer failed to meet the revised deadline. See 15 Bakalar v. Vavra , 851 F. Supp. 2d 489, at 491-92 (S.D.N.Y. 16 2011). The district court did not abuse its discretion in 17 abiding by its discovery calendar, especially in light of 18 its generous extension. 19 20 Finding no merit in Vavra and Fischer’s remaining 21 arguments, we hereby **AFFIRM** the judgment of the district 22
court. 23 24 25 FOR THE COURT: 26 CATHERINE O’HAGAN WOLFE, CLERK 27 28