Abbott Laboratories v. Feinberg

Background

Abbott Laboratories claimed ownership of an oil painting titled “Maine Flowers” by American artist Marsden Hartley. Abbott maintained a corporate art collection and alleged that the original painting was taken during restoration in 1987 by Robert Bruce Duncan, an art restorer, and replaced with a forged copy. The defendants—Nancy Feinberg, Hope Feinberg Schroy, and David Feinberg—were co-executors of Carol Feinberg’s estate. Carol Feinberg had purchased the painting from Berry-Hill Galleries in 1993, and the estate claimed the painting.

After Abbott identified the copy as fraudulent in 2016, it demanded the painting’s return. Carol Feinberg refused. Carol Feinberg had filed a case in the Northern District of Illinois seeking a declaration that she owned the painting. Abbott filed this case seeking return of the painting and a declaration of ownership. The Illinois case was later transferred to the Southern District of New York and consolidated with Abbott’s case. The court applied New York law to Abbott’s return claim.

Claims and Trial

The court conducted a three-day bench trial by videoconference from November 9 through November 11, 2020. Abbott’s replevin claim sought possession of property based on a superior right to possess it. Abbott had to prove by a preponderance of the evidence—meaning that its version was more likely than not—that it was lawfully entitled to possess the painting and that the defendants unlawfully withheld it.

The court found that Abbott more likely than not purchased the original painting in 1960 from art dealer Albert Landry, who obtained it through the estate of art dealer Alfred Stieglitz. The court relied on provenance evidence, markings on the back of the painting, Abbott’s records, a 1961 Abbott publication featuring the painting, and testimony about Abbott’s recordkeeping practices.

The court also found that Abbott sent the original painting to Duncan’s company, the Chicago Appraisers’ Association, for cleaning and restoration in 1987. Duncan later offered the painting for sale without identifying Abbott as its owner. The court found that this evidence, together with evidence that other works Duncan handled were later found to be forgeries, showed that Duncan more likely than not took the original and returned the copy. Duncan sold the original to Eric Kaufman, who later sold it to Berry-Hill Galleries; Berry-Hill sold it to Carol Feinberg in 1993.

The court rejected the defendants’ evidence that Abbott might have sold or transferred the painting to an executive or another person before 1987. The court found no record showing that Abbott sold the painting to Richard Ross, and found that Abbott continued to treat the painting as part of its collection after Ross expressed interest in buying it.

Affirmative Defenses

The defendants asserted three affirmative defenses. An affirmative defense is a legal argument that would defeat a claim even if the plaintiff’s basic allegations were true.

First, the defendants asserted laches, an equitable defense based on unreasonable delay that prejudiced the opposing party. The court found that Abbott did not unreasonably delay. Abbott had no sufficient reason to recognize the substitution in 1987, reasonably interpreted a 2003 expert’s statement that the copy was “consistent with” Hartley’s work as supporting authenticity, and reasonably considered other evidence suggesting that the copy was genuine. The court also found that the defendants had not shown prejudice from the passage of time. The laches defense therefore failed.

Second, the defendants asserted entrustment under New York Uniform Commercial Code section 2-403(2). That defense can prevent an owner from recovering property knowingly entrusted to a merchant who deals in that type of property when the merchant sells it to a buyer in the ordinary course of business. The court found that Abbott used Duncan and his company for appraisal and restoration, not as art merchants, and that the evidence did not show Abbott knew they bought and sold art. The entrustment defense failed.

Third, the defendants asserted unclean hands, which can bar relief when the plaintiff engaged in immoral or unconscionable conduct directly related to the dispute and the defendants were injured by it. The court found that the evidence supported Duncan’s theft rather than a transfer by Abbott’s executives. It also found that Abbott acted reasonably in investigating the copy and promptly acted after the 2016 forensic analysis identified it as a forgery. The unclean-hands defense failed.

Ruling

Judge Lorna G. Schofield concluded that Abbott proved its replevin claim by a preponderance of the evidence and had superior title to “Maine Flowers.” The court held that Abbott prevailed on both its declaratory-judgment claim and its replevin claim. It further stated that Abbott had marketable title free of the defendants’ claims and directed the Clerk of Court to enter judgment for Abbott.