Court declines to extend collateral estoppel defense in artwork ownership litigation.

In Reif v. Nagy, 2017 NY Slip Op 02920 (April 18, 2017), the First Department affirmed a lower court’s ruling dismissing a complaint brought by heirs claiming ownership to Nazi looted art.  The Court held that collateral estoppel did not apply since a lawsuit involving an earlier art piece did not extend to the other two art pieces.

The two artworks in consideration in the present suit were painted by Egon Shiele and include: (1) “Woman in a Black Pinafore” and (2) “Woman Hiding Her Face” .

The plaintiffs are heirs to cabaret artist, Fritz Grunbaum, who was the owner of the artwork before they were looted by the Nazis prior to his execution during the Holocaust.  The defendant, Nagy, an art dealer, procured the artwork around 2013.

The defendants argued that the principle of collateral estoppel should apply since a third piece, “Seated Woman with a Bent Left Leg (Toro)” was previously the basis of a federal lawsuit in which the Court held against the plaintiffs when establishing ownership of that piece.

However, the Court rejected this argument and declined to extend the principle of collateral estoppel to the current suit since “requires the issue to be identical to that determined in the prior proceeding, and requires that the litigant had a full and fair opportunity to litigate the issue”.

Here, the Court observed that the requirements were not fulfilled since “the purchaser, the pieces, and the time over which the pieces were held differ significantly”.  Thus, the Court declined to impute the status of one piece to another since in its opinion, the artworks were not part of the same collection.

Nevertheless, Nagy prevailed in having the§ General Business Law § 349 cause of action dismissed since the facts did not indicate any consumer type harm envisioned by the statute.

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