Was it really too late to reclaim ownership?
In the U.S., the statute of limitations for artwork recovery typically ranges from 3 to 6 years, depending on the state. In New York, under CPLR § 214(3), the statute of limitations for recovering stolen artwork is 3 years, which generally applies to replevin and conversion actions. For the demand-and-refusal rule applied in New York, the clock starts running only when the rightful owner makes a demand for the artwork and the current possessor refuses to return it, which is different from the “discovery rule” applied in New Jersey or California. This protects the owner’s rights, even if the artwork has been hidden for many years before the owner discovers its whereabouts. In Clark’s case, the statute of limitations began only when she initiated litigation in 2022.
However, the laches defense—which prevents claims after unreasonable delay—was a significant factor. Clark had not pursued recovery of the painting immediately after the 1982 court order requiring her ex-husband to return the artwork. The District Court initially dismissed Clark’s case based on the delay.
To understand how laches was applied here, it’s helpful to look at previous cases, as the U.S. common law system relies on precedent. In Solomon R. Guggenheim Foundation v. Lubell (1991), the Guggenheim sought to recover a Chagall gouache stolen in the 1960s and later bought by a good-faith purchaser. The court upheld the demand and refusal rule, meaning the statute of limitations only began when the museum demanded the return of the artwork. However, the court allowed laches to be raised at trial because the museum waited over 29 years before seeking its recovery, and the court recognized that the delay might have prejudiced the defendant’s ability to defend the claim. But a different result was reached in Bakalar v. Vavra (2010), a case concerning an Egon Schiele drawing with unclear WWII-era provenance. Though the statute of limitations hadn’t expired, the court ruled in favor of the current possessor on laches grounds—the heirs making the claim had delayed unreasonably, and the defendant was prejudiced due to lost evidence, deceased witnesses and lost evidence.
Clark’s situation mirrors this, in that her ex-husband Wallace’s death precluded his testimony about the artwork’s history. The District Court noted that the delay prejudiced Clark’s claim, as Wallace was unavailable to testify about key facts—such as when he removed the artwork from their home and whether he ever complied with the court order to return it. Or the physical and psychological abuses that had caused her delay in the claim.
Notably, in Bakalar, the claimant was also able to prove the drawing’s provenance traced back to Mathilde Lukacs, who had sold it to a Swiss gallery in 1956, but the court found that the heirs had not made diligent and timely efforts to recover the artwork.
In Clark v. Hemphill Artworks, LLC, George Hemphill, the gallery owner, is still alive and can testify regarding the last passage of ownership. He was also actively involved in the new consignment of the painting and likely possesses relevant documents detailing both the initial sale made by Hilldeman and the subsequent consignment to Mnuchin Gallery. Clark could argue that the defendants were fully aware of her ongoing search for the artwork and her assertion of ownership before they converted the painting for their own benefit, from the first sale by Hilldeman to the new consignment with Mnuchin.
As Clark’s attorney, Carter A. Reich, Esq., explained on LinkedIn, while the Second Circuit’s decision is a summary order with no precedential effect, it remains citable and significant. The ruling clarifies the elements necessary under New York law to successfully invoke the doctrine of laches. New York’s legal framework for stolen or converted artwork claims offers some flexibility, particularly with the demand and refusal rule, and allows for the potential application of laches.
When reached for comment, Reich told Observer that the decision, along with another recent Second Circuit ruling in Reif et al. v. Art Institute of Chicago (24-809-cv), which reversed a District Court’s finding of laches based on collateral estoppel (relying on the 2011 Bakalar v. Vavra decision), underscores that laches is a fact-intensive inquiry and typically unsuitable for disposition at the pleading stage. Additionally, he emphasized that laches cannot be invoked in bad faith.
“We were confident the District Court misapplied the doctrine of laches, so there was never a question of whether the appeal should be pursued,” he added. “We’re thrilled with the result and feel vindicated that the Second Circuit quickly recognized that a laches defense is simply unavailable to the Defendants.” Reich continued, noting that Clark looks forward to learning the identity of the current possessor of the painting so she can proceed with its recovery.
Is it ever too late to reclaim a consigned work?
This case also serves as a timely prompt in a moment when galleries are under financial pressure and closing. What happens when collectors or artists leave artwork with a gallery for an extended period without claiming it back? How about when a gallery goes bankrupt? This scenario is increasingly common, particularly after the COVID-19 buying boom, when collectors accumulated art only to find themselves facing rising storage costs in a sluggish market where unsold inventory became the norm.
Legally, the fate of art left with a gallery is typically determined by bailment or consignment agreements, which can specify a time limit for the return of the work. Under such contracts, galleries have fiduciary duties, including to return the artwork when the consignment period ends or when the owner requests its return, unless the contract specifies otherwise. Simply leaving an artwork in the possession of a gallery for a long time does not automatically transfer ownership. Unclaimed property statutes like those governing bank accounts don’t apply to art. But if the facts suggest an intent to abandon the piece, or if the gallery sells it and the owner doesn’t act for years, courts may find the claim barred.
The three-year statute for replevin and conversion (CPLR §214(3)) applies even in these circumstances, but it only starts when the owner demands the return of the artwork, and the gallery refuses or repudiates the owner’s rights (e.g., by selling the artwork without consent).
Yet, if an owner—whether a collector or an artist—leaves a piece with a gallery for decades without contact, the gallery may raise the defense of laches if it is prejudiced by the delay. Laches can apply if the gallery relied on apparent abandonment, incurred expenses (for conservation or insurance, perhaps) or lost records or witnesses. This can easily happen when a gallery shuts down and goes into liquidation.
In Rabinor v. Roven (1992), the court allowed the laches defense when the artist left paintings with a gallery for years without taking action to reclaim them. When the gallery sold the works and the artist sued for recovery, the court found that the gallery had been prejudiced by the delay, having relied on the apparent abandonment and lost records about the original agreement.
Similarly, in Ming v. Art Gallery (California, 1997), the court upheld the gallery’s laches defense when the owner left an artwork with the gallery for years without contact. When the owner eventually demanded the piece’s return, the gallery had sold it. The court ruled that the gallery had relied on apparent abandonment, had incurred expenses and had lost records related to the consignment. A similar outcome occurred in Hickey v. Art Dealer (2005), where a collector left a sculpture with an art dealer for years, and the dealer sold it. The court allowed the laches defense here, too, finding significant prejudice due to the long delay, including the loss of records and incurred costs.
This situation becomes even more complicated when a gallery is liquidated, and creditors claim artworks left by collectors or artists as part of the gallery’s security interest. This can result in complex legal disputes over ownership, security interests and the rights of the artist or collector.
Whether a creditor can claim the artwork depends on whether the security interest was properly laid out—usually through a UCC-1 Financing Statement or other legal documentation—and whether the gallery had the right to pledge the artwork as collateral. The danger in not perfecting the security interest—which is often a simple and inexpensive procedure—when consigning artwork is that it can result in the loss of ownership rights, especially after bankruptcy. Additionally, if the artwork has been left in the gallery for a long time, the laches defense can further complicate the recovery.
This lesson is highlighted in Ganz v. Sotheby’s Financial Services (2006), which involved a Marc Chagall painting titled Soleil couchant à Saint-Paul. The painting was transferred from its rightful owner, Ganz, to art dealer Michel Cohen, and later to Sotheby’s Financial Services as collateral for a loan. When Cohen defaulted and disappeared with Sotheby’s money, the dispute over ownership ensued. Although the transfer from Ganz to Cohen was a consignment, the court found that there was a factual issue about whether Cohen was known by his creditors “to be in the business of selling other people’s goods.” This was crucial in determining whether Cohen could have transferred a valid title to Sotheby’s.
Ganz could have avoided this uncertainty by filing a UCC-1 Financing Statement, which would have perfected his security interest in the painting and provided clear notice of his ownership rights. Compliance with U.C.C. requirements protects the consignors, regardless of whether the consignment is characterized as a sale, when the gallery becomes insolvent or faces difficulties with creditors.
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