Zuckerman v. Metro. Museum of Art - 307 F. Supp. 3d 304 (S.D.N.Y. 2018)

Rule:

Jurisdiction in this case is predicated on diversity of citizenship, and therefore New York's choice-of-law rules apply. Bakalar v. Vavra, 619 F.3d 136, 139 (2d Cir. 2010) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941). "Under New York choice-of-law rules, the first inquiry in a case presenting a potential choice-of-law issue is whether there is an actual conflict of laws on the issues presented." The court will not engage in the choice-of-law analysis if there is no actual conflict.  However, where an actual conflict exists, New York courts give controlling effect to the law of the jurisdiction having "the greatest concern with the specific issue raised." Loebig v. Larucci, 572 F.2d 81, 84 (2d Cir. 1978).

Facts:

This is an action by Laurel Zuckerman, the Ancillary Administratrix of the estate of Alice Leffmann (the sole heir of Paul Friedrich Leffmann) (the "Leffmann estate"), to recover from New York's Metropolitan Museum of Art (the "Museum") a monumental work by Pablo Picasso entitled "The Actor," 1904-1905, oil on canvas, 77 1/4 x 45 3/8 in., signed lower right Picasso ("The Actor")(the "Painting"), which was owned by Paul Friedrich Leffmann ("Leffmann"), a German Jew, from approximately 1912 until 1938. In 1937, Alice and Paul Leffmann (the "Leffmanns") fled from Germany to Italy in fear for their lives, after losing their business, livelihood, home, and most of their possessions due to Nazi persecution. In 1938, while living in Italy, the Leffmanns sold the Painting at a price well below its actual value in an effort to gather enough money to pay for passage out of Italy, which itself had become a perilous place for the Leffmanns to remain. The Museum received the Painting as a donation in 1952 and has possessed it since that time. Plaintiff, the great-grandniece of Paul and Alice Leffmann, received Ancillary Letters of Administration CTA for the estate of Alice Leffmann from the Surrogate's Court of the State of New York, New York County, on October 18, 2010. Pursuant to 28 U.S.C. § 1332(c)(2), because Alice Leffmann was a Swiss domiciliary, the Ancillary Administratrix is deemed to be a citizen of Switzerland as well. In this diversity suit, Plaintiff sought replevin of the Painting, $100 million in damages for conversion, and a declaratory judgment pursuant to 28 U.S.C. §§ 2201-2202 declaring the Leffmann estate as the sole owner of the Painting on the grounds that good title never passed to the Museum, inter alia, because the 1938 sale of the Painting was void for duress under Italian law. Defendants moved to dismiss the Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6).

Issue:

Was the Museum’s contention that under either Italian law or New York law, Plaintiff has not adequately alleged duress and that, even under Italian law, the Leffmanns' sale of the Painting did not violate public order or public morals meritorious?

Answer:

Yes

Conclusion:

The court granted Defendant’s Motion to Dismiss the Amended Complaint and held that the 1938 transaction would not be subject to rescission under Italian law. Plaintiff was unable to plead "a wrongful threat" by the Defendant Museum or the counterparties to the 1938 transaction. Plaintiff failed to plead that the Leffmanns entered into the 1938 transaction by force that precluded the exercise of their free will. Additionally, the Leffmanns negotiated with several parties prior to the 1938 transaction, rejected offers from other dealers, and attempted to "improve their leverage to maximize" the sale price before ultimately accepting an offer from Perls and Rosenberg, the proceeds of which the Leffmanns retained and used in later years. Accordingly, these allegations are fatal to a claim of duress as Plaintiff is unable to show "a wrongful threat by the other party which precluded the exercise of [Paul's] free will in making the contract at issue." Plaintiff failed to plead facts demonstrating that the Leffmanns had "no other alternative" than to engage in the 1938 transaction. Plaintiff's assertion that the Leffmanns were "forced by the circumstances in Fascist Italy to sell [the Painting] under duress in 1938" conflated the Leffmanns' need "to raise as much cash as possible" with the Leffmanns having "no other alternative." The fact that the Leffmanns spent several years looking to sell the Painting, rejected other offers, and had additional assets including properties in Italy that they sold to an Italian businessman in 1937, suggests that they had other financial alternatives. Accordingly, the court found that there was no outcome-determinative difference between Italian law and New York law; Plaintiff's claims failed under both.