BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 2765|
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                                 THIRD READING


          Bill No:  AB 2765
          Author:   Assembly Judiciary Committee
          Amended:  8/18/10 in Senate
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  4-0, 6/22/10
          AYES:  Corbett, Harman, Hancock, Leno
          NO VOTE RECORDED:  Walters

           ASSEMBLY FLOOR  :  74-0, 5/6/10 - See last page for vote


           SUBJECT  :    Civil actions:  statutes of limitation:  theft

           SOURCE  :     Author


           DIGEST  :    This bill extends the statute of limitations  
          (SOL) from three to six years for actions against a museum,  
          gallery, auctioneer, or dealer for specific recovery of an  
          article of historical, interpretive, scientific, cultural,  
          or artistic significance.  This bill provides that the  
          statute of limitations for these types of actions begins to  
          accrue at the time of the actual discovery of the  
          whereabouts of the article and the facts constituting the  
          cause of action.  This bill applies these provisions to  
          actions based on property taken by theft prior to 1983.   

           Senate Floor Amendments  of 8/18/10 provide additional  
          restrictions on the statute of limitations for actions  
          against museums for the specific recovery of fine art, as  
          defined.  These amendments also provide a sunset of  
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          December 31, 2017 for actions brought under the provisions  
          of this bill, restrict application of the bill to pending  
          and future actions, provide clarifying definitions of  
          various key terms, and provide defendants of these actions  
          with equitable and legal affirmative defenses and  
          doctrines.


           ANALYSIS  :    Existing law provides that a civil action, in  
          the case of a theft, shall be commenced within three years.  
           Existing law provides that in the case of a theft of any  
          article of historical, interpretive, scientific, cultural,  
          or artistic significance, a cause of action is not deemed  
          to have accrued until the discovery of the whereabouts of  
          the article by the aggrieved party, his or her agent, or a  
          law enforcement agency.

          This bill authorizes a civil action against a museum,  
          gallery, auctioneer, or dealer for the recovery of works of  
          fine art that were unlawfully taken or stolen, including a  
          taking or theft by means of fraud or duress, to be  
          commenced within six years of the actual discovery by the  
          claimant or his or her agent of the identity and  
          whereabouts of the work of fine art and information or  
          facts that are sufficient to indicate that the claimant has  
          a claim for a possessory interest in the work of fine art.   
          This bill applies to pending and future actions commenced  
          on or before December 31, 2017, and would include any  
          actions that were dismissed based on the expiration of  
          statutes of limitation in effect prior to the date of the  
          enactment of this bill if, prior to that date, the judgment  
          in the action was not final or the time for filing an  
          appeal from a decision on that action had not expired,  
          provided that the action concerns a work of fine art that  
          was taken within 100 years prior to the date this bill is  
          enacted.

          This bill contains the following legislative findings and  
          declarations:

          1. California's interest in determining the rightful  
             ownership of fine art is a matter of traditional state  
             competence, responsibility, and concern.








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          2. Because objects of fine art often circulate in the  
             private marketplace for many years before entering the  
             collections of museums or galleries, existing statutes  
             of limitation, which are solely the creatures of the  
             Legislature, often present an inequitable procedural  
             obstacle to recovery of these objects by parties that  
             claim to be their rightful owner.

          3. Decisions from California's intermediate appellate  
             courts have reached differing conclusions as to whether  
             the statute of limitation based upon the "discovery of  
             the whereabouts of the article by the aggrieved party"  
             rule in subdivision (c) of Section 338 of the Code of  
             Civil Procedure was intended to apply to property stolen  
             prior to 1983, when the express discovery rule was  
             enacted. In  Naftzger v. American Numismatic Society   
             (1996) 42 Cal.App.4th 421, the court held that the  
             discovery rule applies to actions to recover property  
             stolen prior to 1983 because there was a discovery rule  
             implicit in the prior version of that statute.

          The Legislature finds and declares that the court's  
          decision in  Naftzger v. American Numismatic Society   
          properly construed the Legislature's intent, as to the  
          applicability of the discovery rule for thefts occurring  
          before 1983, and the Legislature hereby abrogates any  
          contrary holding.

          In enacting an "actual discovery" rule for actions against  
          a museum, gallery, auctioneer, or dealer to recover fine  
          art, the Legislature finds and declares that:

          1. Museums and galleries have played, and continue to play,  
             an important role in making information about their  
             collections, exhibitions, and acquisitions publicly  
             available and have invested significant resources in the  
             care, conservation, study, and display of art objects  
             for the benefit of the public. Museums and galleries  
             have also increasingly and voluntarily made archives,  
             databases, and other resources more accessible to  
             individuals and organizations seeking information about  
             the location and history of particular art objects,  
             thereby assisting the rightful owners of works of fine  
             art who may have a claim for the recovery of these  







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             works.

          2. The application of statutes of limitations and any  
             affirmative defenses to actions for the recovery of  
             works of fine art should recognize this public role  
             taken by museums and galleries and should provide  
             incentives for research and publication of provenance  
             information about these art works, in order to encourage  
             the prompt and fair resolution of claims.

          3. In the establishment of an "actual discovery" rule for  
             the commencement of a statute of limitations for these  
             actions, it is appropriate to provide that, in addition  
             to any legal defenses and doctrines currently available  
             to parties under California law, all equitable  
             affirmative defenses and doctrines are available to the  
             parties, including, without limitation, laches and  
             unclean hands, in order to permit the courts to take all  
             equitable considerations in either party's favor into  
             account.

          According to the author's office:

               This bill addresses a problem faced by persons who are  
               attempting to recover art and other valuable objects  
               that may have been stolen several years ago and are  
               only more recently on display at a museum or gallery.   
               It is in the very nature of stolen art that it  
               circulates underground for several years before it  
               appears in museums and galleries, and by that time the  
               SOL has passed.  Case law in California and elsewhere  
               has recognized that, given the nature of stolen art,  
               the proper trigger for the SOL is actual discovery.   
               Recent cases have divided on the question of whether  
               the "discovery" rule that was adopted by the  
               Legislature in 1982 applies to works stolen before  
               1983 (when the statute became effective) and whether  
               the discovery intended was "actual" or "constructive."  
                This amendment would clarify these questions for  
               purposes of actions brought to recover art on display  
               in a museum or gallery.  In addition to these state  
               appellate cases, a recent decision striking down a  
               statute targeted solely at the Nazi-looted art (on  
               foreign policy preemption grounds) also noted the  







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               confusion of the two appellate court rulings on these  
               questions.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Anderson, Arambula, Beall, Bill  
            Berryhill, Tom Berryhill, Blakeslee, Blumenfield,  
            Bradford, Brownley, Buchanan, Caballero, Charles  
            Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De  
            Leon, DeVore, Emmerson, Eng, Evans, Feuer, Fletcher,  
            Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,  
            Garrick, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,  
            Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue,  
            Bonnie Lowenthal, Ma, Miller, Monning, Nava, Nestande,  
            Niello, Nielsen, Norby, V. Manuel Perez, Portantino,  
            Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio,  
            Audra Strickland, Swanson, Torlakson, Torres, Torrico,  
            Tran, Villines, Yamada, John A. Perez
          NO VOTE RECORDED:  Bass, Block, De La Torre, Gilmore,  
            Mendoza


          RJG:nl  8/19/10   Senate Floor Analyses 

                       SUPPORT/OPPOSITION:  NONE RECEIVED

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