In the case that many say launched a stream of Nazi-era looted-art litigation in the late 1990s, New York SGR attorney and his team are finally getting Egon Schiele’s Portrait of Wally — kept under wraps and out of the public eye since it was seized in 1998 — her day in court.

In January 1998, the Manhattan District Attorney subpoenaed two Egon Schiele paintings that were part of a large exhibition on loan from the Leopold Museum in Vienna to the Museum of Modern Art (MoMA) in New York City. Claiming the paintings had been unlawfully taken from Jewish collectors in Austria during the pre-war Nazi era, the District Attorney’s seizure terrified museums, who feared that international lending to New York institutions might cease altogether, or that the museums would be heavily penalized for their inability to return works loaned to them.

One of the Schiele claims collapsed almost immediately, but the District Attorney’s claim for Wally was dismissed only after three New York state courts had heard the case. The same day that the highest court in New York nullified the subpoena, the U.S. government stepped in and obtained a seizure order based on the assertion that Wally had been stolen from Lea Bondi Jaray, a Viennese art dealer, by another Austrian dealer named Friedrich Welz, and that the Leopold Museum knew the painting was stolen and had allowed its importation in violation of the National Stolen Property Act (which prohibits the importation of property known to be stolen and subjects the stolen property to forfeiture to the government).

The Leopold Museum Foundation turned to SGR’s Barron, an experienced international lawyer and litigator, for assistance. The U.S. government asserted first, that the painting had been “stolen” in pre-war Austria; second, that it remained “stolen” when the MoMA imported it 60 years later for its exhibition in 1997; and third, that the Leopold Museum Foundation actually knew it was stolen when it was imported in 1997.

Barron noted that the government’s complaint acknowledged that the painting had been recovered by U.S. forces in Austria shortly after World War II, and that it had been turned over to the Republic of Austria for restitution to the rightful owner. As a result, Barron filed a motion to dismiss the complaint, since stolen property loses any taint once it is recovered by the authorities with an eye toward restoring it to its rightful owner.

FOUR DECADES OF SILENCE

In 2000, Judge Michael Mukasey granted the Foundation’s motion and dismissed the forfeiture complaint based upon this “recovery doctrine.” That was not the end of the matter, however, as Judge Mukasey allowed the government to amend its complaint to delete this reference to Wally’s recovery and, in 2002, he denied the Foundation’s motion to dismiss the newest complaint (then the fourth version filed by the United States).

In the seven years since, Wally has languished in a warehouse in New York City while the lawyers researched historical archives and deposed now-elderly witnesses in the United States and Austria. Last year, the Leopold Museum Foundation filed a detailed motion for summary judgment, asserting that the evidence shows that the recovery doctrine applies in the case; that in any event Wally had not been stolen; that Wally had lost any taint of the theft during subsequent sales and re-sales; that Lea Bondi Jaray and her heirs had lost any claim because of their complete silence for more than 40 years; and that the four decades of silence made it inconceivable that the Leopold Museum Foundation, formed only in 1994, could have had any knowledge that the painting was “stolen.” The government filed its own counter-motion for summary judgment, claiming that the evidence and/or the law entitles it to forfeiture of Wally.

On September 30, 2009, shortly after the 10th anniversary of the United States’ first complaint, Chief Judge Loretta A. Preska denied both motions for summary judgment, finding that the question of whether the Leopold Museum knew the painting was allegedly stolen when it was brought to the U.S. is a triable issue of fact. This long-pending case may finally be headed for trial, and the lady nicknamed Wally may at last be released into the public eye again.

TIMELINE TO TRIAL

1998 Two Egon Schiele paintings on loan from the Leopold Museum in Vienna to the Museum of Modern Art in New York are subpoenaed by the Manhattan District Attorney.

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2000 Judge Michael Mukasey grants the Leopold Museum Foundation’s motion and dismisses Government’s forfeiture complaint.

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2001 Judge Mukasey allows Government to amend its complaint.

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2002 Judge Mukasey denies the Foundation’s motion to dismiss the newest complaint.

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2009 Judge Loretta Preska finds that the question of whether the Leopold Museum knew painting was allegedly stolen when it was brought to the U.S. is triable issue of fact.