Rosenberg v. Seattle Art Museum

Citations: 124 F. Supp. 2d 1207; 2000 U.S. Dist. LEXIS 7770; 2000 WL 1809149Docket: C98-1073L

Court: District Court, W.D. Washington; March 22, 2000; Federal District Court

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In the case of Rosenberg and Sinclair v. Seattle Art Museum, the U.S. District Court for the Western District of Washington granted the Seattle Art Museum's (SAM) Motion for Reconsideration concerning a prior summary judgment in favor of third party defendant Knoedler-Modarco, Inc. SAM argued that the Court had made three errors: it failed to consider the language of the will and trust instrument that bequeathed the painting L'Odalisque to SAM; it misunderstood the enforceability of agreements under RCW 11.96.170 in will and trust administration; and it lacked jurisdiction to overrule conclusions from those agreements. 

Regarding the will and trust language, SAM contended that the phrases indicating the Bloedels' intent to transfer "all interest in" L'Odalisque implied a transfer of associated tort claims. The Court noted that SAM did not provide legal authority to support this assertion and referenced Washington law, specifically Conaway v. Co-Operative Home Builders, which states that transferring ownership of personal property does not transfer related fraud claims. Consequently, the Court found no clear error in its original ruling concerning the interpretation of the will and trust documents.

The Court's analysis of RCW 11.96.170 concluded that the dispute regarding SAM's standing to assert the Bloedels' fraud claim did not arise "in the administration of" the Bloedels' estates or trust, thereby rendering the statute inapplicable. SAM's claim, originating from a lawsuit involving the Rosenbergs, SAM, and Knoedler, did not transform into an estate administration dispute despite SAM's assertion of receiving the fraud claim through a will or trust. The Court determined that SAM's interest in the Bloedels' estate was fully realized upon the transfer of the painting, L'Odalisque, and subsequent realization that the Bloedels lacked good title did not invoke estate administration issues.

Furthermore, the Court clarified that the agreement under RCW 11.96.170 could only bind parties to the dispute, which excludes Knoedler if not included in the original agreement. Thus, the agreement was deemed irrelevant to the current dispute. The Court rejected SAM's argument that it had "overruled" the agreement, maintaining that it had the jurisdiction to assess the agreement's validity, which was necessary for adjudicating Knoedler's motion for summary judgment.

After the Court's ruling, SAM acquired an assignment of the Bloedels' fraud claim from the Bloedel heirs. The Court acknowledged the complexity introduced by this new assignment, noting that while the heirs' earlier agreement was insufficient to modify the will and trust terms, the assignment effectively allowed SAM to pursue the fraud claim, which it had been previously unable to do based on the facts at the time of the summary judgment.

Heirs have assigned their claim to SAM, which may lead to new litigation over res judicata issues if SAM reasserts the claim. SAM could also seek relief from judgment under Rule 60 due to this unusual development. Should the heirs attempt to act where SAM did not, Knoedler would likely argue that the Assignment prevents their action. Upholding the final judgment could ironically result in more litigation over ancillary matters than simply proceeding with the fraud claim. The Court notes that SAM's delay in obtaining the Assignment until after judgment raises unnecessary costs for Knoedler. Nonetheless, the Court deems it equitable for SAM to pursue the case on its merits now that the Assignment exists. Consequently, SAM is ordered to pay Knoedler's costs and fees related to the Motion for Reconsideration. The Court acknowledges the fraud claim survived the Bloedels' deaths and was passed to their heirs, and it recognizes new facts warranting reconsideration. The Court grants SAM's Motion for Reconsideration and orders it to cover Knoedler's incurred costs. Knoedler must submit a cost statement within 30 days, and both parties are instructed to confer on a new trial date and schedule, submitting a proposal within ten days. The Clerk is to distribute copies of the order to all counsel.