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United States: Heiress Loses Appeal to Retain Painting Confiscated by Nazis

(Dec. 15, 2008) On November 19, 2008, the U.S. Court of Appeals for the First Circuit rejected an appeal by the heiress to a painting confiscated by Germany's Nazi government from a Jewish art dealer, refusing her claim that the art dealer had delayed efforts to recover the painting in a way that prejudiced the heiress's rights.

The litigation involves the effort of the heirs of Dr. Max Stern to recover a painting by the 19th- century painter Franz Xaver Winterhalter. The painting was one of hundreds of works in Stern's collection that the Nazi government in 1937 forced Stern to liquidate because he was Jewish. A Nazi-approved auction house sold the painting at well below market value to Dr. Karl Wilharm, the stepfather of a German baroness, Maria-Louise Bissonnette, the defendant in this litigation. Stern escaped Germany, and immediately after World War II ended began trying to recover his collection. Bissonnette inherited the painting in 1991. In 2003, Bissonnette placed the painting on consignment with a Rhode Island auction house. When the auction house advertised the painting, Stern's estate learned of Bissonnette's possession, and, following unsuccessful negotiations, filed an action in the U.S. District Court for Rhode Island to recover it. That court found that the painting was taken unlawfully from Dr. Stern by the Nazi government, that Wilharm's acquisition of it through a forced sale meant that he did not obtain good title, and that Bissonnette's possession of it is therefore wrongful. The district court rejected Bissonnette's argument that Stern's estate was not entitled to the painting under the doctrine of laches because Stern was not diligent in seeking to recover the painting, finding that Stern took substantial steps to locate his paintings as quickly as he was reasonably and safely able to do so.

Bissonnette appealed, arguing that the district court erred in rejecting her laches defense. The First Circuit ruled that Bissonnette failed to demonstrate how Stern's alleged failure to diligently pursue recovery of the painting prejudiced her by preventing her from acquiring any documents or testimony that would actually assist her defense. It also rejected her claim that the district court erred in refusing her request to reopen discovery, finding that Bissonnette failed to offer any persuasive explanation why she failed to complete discovery during the ten-month discovery period allowed by the district court. (Vineberg v. Bissonnette, No. 08-1136 (1st Cir. Nov. 19, 2008), available at