Grossman LLP | New Lawsuit Again Highlights the Need for Adequate Pre-Sale Diligence
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  • New Lawsuit Again Highlights the Need for Adequate Pre-Sale Diligence
    The spotlight once again is focused on questions concerning the appropriate level of pre-sale diligence in art transactions, this time with allegations against the National Gallery in London.  On Tuesday, the heirs of Margarete “Greta” Moll brought suit against The National Gallery of Art seeking to recover a painting by Henri Matisse, Portrait of Greta Moll, allegedly lost in the aftermath of World War II.  Williams v. The National Gallery of Art, London, et al., Case No. 16-cv-06978.

    Plaintiffs allege that Moll and her husband were Matisse’s art students in Paris when Moll sat for and purchased the painting with her husband in 1908.  Fearing the painting would be lost or destroyed during the allied occupation of Germany, Moll allegedly entrusted an art student of her husband’s to deliver the painting to an art dealer in Switzerland who would hold it for safekeeping until Moll could secure its safe return.  The student, however, allegedly took the painting to Switzerland, sold it and kept the proceeds.

    In 1949 the painting was acquired and brought to the United States by the now-defunct Knoedler Gallery, and eventually, some thirty years later, it was sold to the National Gallery.   The heirs now seek, among other things, an order declaring them the owners of the painting and the return of the painting or proper compensation of not less than thirty million dollars.

    The Moll heirs were prevented from bringing suit in Great Britain as a result of Museum and Galleries Act of 1992, prohibiting the disposal of objects that are the property of the National Gallery.  Instead, they are seeking relief in federal court in New York, claiming that ties to New York exist where the painting was in New York in Knoedler’s possession; it has been loaned to New York by the National Gallery for exhibition purposes; and its image has been sold in exhibition catalogues, books and posters in New York through a subsidiary of the National Gallery.

    Plaintiffs contend that the National Gallery, an agency of Great Britain, is not immune to suit because it did not do proper pre-sale “due diligence,” adding it to a long list, as discussed here, of buyers left vulnerable to suit after purchasing works in the face of red flags.  Here, plaintiffs claim that the National Gallery ignored the “red flag that the painting had been transferred immediately after WWII and did not inquire with the Moll family as to how Greta Moll lost possession of the painting.”

    The suit also once more draws attention to the infamous Knoedler Gallery, who acquired the painting in Europe after the war, leading to its eventual sale to the National Gallery.  This is not the first time the Knoedler Gallery has been involved in a lawsuit regarding the alleged possession and sale of art that was looted during World War II.  In 1998, the Knoedler Gallery was a third-party defendant in Rosenberg v. Seattle Art Museum, Case No. 98-cv-01073, Western District of Washington, where the heirs of an art dealer sued the Seattle Museum of Art for the return of a Matisse painting Odalisque, that was confiscated by Nazis in 1941.  The Museum had received the painting as a donation from a family who had purchased it from the Knoedler Gallery in the 1950s.  The case was eventually settled and the work was returned to Plaintiffs.

    This case serves as yet another reminder to those who buy and sell art that diligence is paramount—no matter how trusted the seller, and no matter how savvy the buyer.