Vineberg v. Bissonnette - 548 F.3d 50 (1st Cir. 2008)

Rule:

The mere passage of time is insufficient to invoke the defense of laches.

Facts:

In 1934, Dr. Max Stern inherited an art gallery located in Dusseldorf, Germany. Dr. Stern, who was of Jewish ancestry, quickly became an object of Nazi persecution. The Reich Chamber for the Fine Arts, an organ of the Nazi government, determined that Dr. Stern lacked the requisite personal qualities to be a suitable exponent of German culture. For that reason, it directed Dr. Stern to liquidate the gallery and its inventory. After unsuccessfully appealing this edict, Dr. Stern surrendered to the inevitable. He consigned most of the affected works of art to the Lempertz Auction House (LAH), a government-approved purveyor. The consignment included a painting by Franz Xaver Winterhalter known as "Madchen aus den Sabiner Bergen" (the Painting). In November of 19 # 7, LAH auctioned the consigned pieces (including the Painting) at prices well below their fair market value. Fearing for his life, Dr. Stern fled Germany shortly after the forced sale. He eventually settled in Canada. The Nazi government prevented him from retrieving the auction proceeds.

During World War II, many of LAH's records were destroyed by bombing. That circumstance hampered post-war searches to identify and locate the purchasers of Dr. Stern's collection. Nevertheless, Dr. Stern made various efforts to find the works of art that had been wrested from him. In the immediate aftermath of World War II, Dr. Stern recovered some of his paintings through the Canadian Military Mission. He also filed a restitutionary claim with the military government in the British zone of occupied Germany. Having achieved only limited success, Dr. Stern placed advertisements in Canadian Art and Die Weltkunst in 1948 and 1952, respectively. In addition, he visited Europe in 1949 to hunt for his missing artworks. In 1958, Dr. Stern initiated judicial proceedings in Germany regarding paintings seized by the Nazi government. Among other things, he later pursued claims for monetary compensation in the German restitution courts. In 1964, a German court awarded Dr. Stern damages for profits lost due to the forced sale of his art collection. 

When Dr. Stern died in 1987, he bequeathed the residue of his estate, including any interest in the Painting, to what the parties have called the Stern Estate. In April of 2004, the Stern Estate contracted the Art Loss Register (the Register), an art recovery company and databank, to assist in the search for the missing works of art. For good measure, the estate also listed the Painting on Germany's Lost Art Internet Database. As matters turned out -- none of this was known to Dr. Stern or his successors in interest until the end of 2004 -- the Painting had been purchased from LAH in 1937 by Dr. Karl Wilharm. For more than six decades, it remained sequestered in the private collection of Dr. Wilharm and his descendants, with the exception of a single brief exhibition in Kassel, Germany in the early 1950s. Defendant-appellant Baroness Maria-Louise Bissonnette, Dr. Wilharm's step-daughter, took possession of the Painting in 1959 and formally inherited it as part of her mother's estate in 1991. Bissonnette has resided in the United States since 1956. She brought the Painting with her when she moved to Rhode Island in 1991. In April of 2003, she consigned the Painting to Estates Unlimited, a Rhode Island auction house. After verifying the Painting's authenticity, Estates Unlimited scheduled an auction for January 6, 2005. Promotional activities began. Shortly before the appointed auction date, the Register informed the Stern Estate about what was transpiring. It simultaneously notified Estates Unlimited of the Stern Estate's claimed interest in the Painting. As a prudential measure, Estates Unlimited withdrew the Painting from the scheduled auction.

In January of 2005, the Stern Estate filed a claim for the Painting with the New York Holocaust Claims Processing Office (HCPO). HCPO demanded that Bissonnette return the Painting. Although Bissonnette refused to honor that demand, negotiations ensued. When the talks failed, Bissonnette shipped the Painting to Germany and instituted an action in a German court to determine ownership. That led to the institution of the instant action in Rhode Island's federal district court. The named plaintiffs are Robert S. Vineberg, Michael D. Vineberg, and Sydney Feldhammer, in their capacities as trustees of the Dr. and Mrs. Stern Foundation. They sought to replevy the Painting or, in the alternative, to recover damages. Following a period of discovery, the trustees moved for summary judgment. In a comprehensive rescript, the district court granted the motion and ordered replevin. In so holding, the court rejected a proffered laches defense, concluding (i) that Dr. Stern and the Stern Estate had exercised reasonable diligence in searching for the Painting and (ii) that in all events, the defendant had not been prejudiced by any delay in the filing of suit.

Issue:

Did the court err in summarily rejecting Bissonnette’s laches defense?

Answer:

No.

Conclusion:

Typically, the kind of prejudice that will support a laches defense arises out of a loss of evidence, the unavailability of important witnesses, the conveyance of the property in dispute for fair market value to a bona fide purchaser, or the expenditure of resources in reliance upon the status quo ante. Looked at more globally, prejudice in this context is normally either evidence-based or expectations-based. In this venue, Bissonnette suggests, without the slightest elaboration, that potential witnesses and evidence are likely unavailable at this late date. This suggestion is deeply flawed. For one thing, the court of appeals is not a place in which a party should be allowed to pull a rabbit out of a hat. New arguments are not ordinarily permitted on appeal. That maxim applies in this instance because Bissonnette wholly failed to raise the possibility of evidence-based prejudice in the district court. Accordingly, the court may not consider the possibility now. Even it were to consider this evidence-based contention, it would not serve Bissonnette's ends. In making this belated reference, she fails to point to any particular witnesses (or types of witnesses) whom she might have consulted or to any particular documents (or types of documents) that she might have located but for the delayed commencement of the action. She has not even adumbrated the nature of the witnesses or evidence that might have been marshaled if not for the passage of time. Proving prejudice requires more than the frenzied brandishing of a cardboard sword; it requires at least a hint of what witnesses or evidence a timeous investigation might have yielded. If more were needed -- and there is doubt that it is -- there is a structural defect in Bissonnette's belated assertion of evidence-based prejudice: she has not explained how the acquisition of further testimony or documents might assist her defense. Where courts have allowed a laches defense to be premised on an evidence-based predicate, they have done so because that evidence would have been relevant to one or more essential issues in dispute between the parties. Here, however, Bissonnette has chosen not to contest ownership of the Painting. Given that choice and Bissonnette’s failure to identify any other controverted issue to which difficult-to-locate witnesses or evidence might be pertinent, she cannot make a credible showing of evidence-based prejudice.

In the court below, Bissonnette advanced two additional grounds for a prejudice finding: (i) that she had been forced to defend protracted litigation, which tarnished her good name; and (ii) that she had lost the opportunity to sell the Painting. The district court turned a deaf ear to these plaints. Because Bissonnette has not resurrected either argument on appeal, we deem these plaints abandoned. To recapitulate, because the burden of proving laches rests with the proponent of that defense, Bissonnette had an obligation to adduce specific evidence of prejudice in order to thwart the plaintiffs' motion for summary judgment. Bissonnette failed to carry this burden; the record before the district court contained no legally cognizable evidence of prejudice. That is the end of the line.