Zuckerman v. The Metropolitan Museum of Art
307 F. Supp. 3d 304 (2018)
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Rule of Law:
Under New York law, a claim of economic duress requires a wrongful threat made by the other party to the contract, which precludes the exercise of free will. The pressure of desperate financial circumstances or general political persecution not caused by the defendant is insufficient to void a contract for duress.
Facts:
- Around 1912, Paul and Alice Leffmann, a wealthy German Jewish couple, purchased Pablo Picasso's painting, 'The Actor'.
- Beginning in 1933, the Nazi regime systematically dispossessed the Leffmanns of their business, home, and most of their assets.
- Prior to their departure from Germany, the Leffmanns arranged for 'The Actor' to be held for safekeeping in Switzerland, thus saving it from Nazi confiscation.
- In 1937, the Leffmanns fled Nazi Germany for Italy.
- As Fascist Italy became increasingly perilous for Jews due to its alliance with Nazi Germany, the Leffmanns decided they needed to flee again.
- In June 1938, needing money for their passage to Switzerland and then Brazil, the Leffmanns sold 'The Actor' for $12,000 net to art dealers Kate Perls, Hugo Perls, and Paul Rosenberg, a price they had previously rejected.
- The painting was subsequently sold to Thelma Chrysler Foy, who donated it to the Metropolitan Museum of Art in 1952.
Procedural Posture:
- Laurel Zuckerman, as Ancillary Administratrix of the Leffmann estate, filed a lawsuit against the Metropolitan Museum of Art in the U.S. District Court for the Southern District of New York.
- The complaint sought replevin of the painting 'The Actor', $100 million in damages for conversion, and a declaratory judgment of ownership.
- The Museum filed a motion to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted.
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Issue:
Does the sale of a painting by a Jewish family at a low price to fund their escape from Fascist Italy constitute a sale under economic duress that can be voided, when the duress was caused by the persecution of the Nazi and Fascist regimes and not by the buyers of the painting?
Opinions:
Majority - Preska, J.
No, the sale of the painting does not constitute a transaction made under voidable economic duress. To void a contract on the ground of economic duress under New York law, a plaintiff must show that the transaction was procured by a wrongful threat made by the defendant that precluded the exercise of free will. Here, the Leffmanns' desperate circumstances were a result of persecution by the Nazi and Fascist regimes, not any wrongful threat from the art dealers who purchased the painting. The court found that although the Leffmanns were under immense pressure, they still exercised free will by exploring the sale, negotiating with multiple parties over time, and ultimately choosing to accept an offer. The pressure exerted by general economic and political conditions, not caused by the counterparties to the transaction, is insufficient to establish a claim of duress. Furthermore, the court held that even if Italian law were to apply, the result would be the same, as Italian law also requires a specific and concrete threat from the counterparty to establish duress.
Analysis:
This decision significantly clarifies the high bar for claiming economic duress in Nazi-era art restitution cases under New York law. By requiring the coercive threat to come directly from the counterparty to the transaction, the ruling distinguishes between sales forced by a persecuting regime and sales made under the pressure of circumstances created by that regime. This precedent makes it substantially more difficult for heirs to reclaim art sold by their families to escape persecution, unless they can prove the buyer was complicit in or directly caused the coercive environment. The court's choice-of-law analysis also reinforces New York's strong interest in providing a stable and predictable legal framework for its world-leading art market.
