BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Senator Ellen M. Corbett, Chair
2009-2010 Regular Session
AB 2765 (Committee on Judiciary)
As Amended April 22, 2010
Hearing Date: June 22, 2010
Fiscal: No
Urgency: No
TW:jd
SUBJECT
Civil Actions: Statutes of Limitation: Theft
DESCRIPTION
This bill would extend the statute of limitations 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 would provide 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 would apply these
provisions to actions based on property taken by theft prior to
1982, regardless of whether or not the action would otherwise
have been barred by an applicable statute of limitation under
any other provision of law in effect prior to 1982.
This bill would authorize the revival of actions, and would
apply to pending actions including an appeal from a prior
dismissed action, against a museum, gallery, auctioneer, or
dealer for specific recovery of an article of historical,
interpretive, scientific, cultural, or artistic significance
that would have satisfied a six-year statute of limitations
based on the actual discovery of the whereabouts of the article
and the facts constituting the cause of action. The revival of
or application to such actions must have been dismissed in whole
or in part upon the expiration of the statute of limitations
existing at the time of the dismissal.
BACKGROUND
(more)
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Prior to 1983, the statute of limitations for recovery of art or
an artifact did not specify on which date the statute of
limitations would begin to run - the date the item was stolen or
the date of locating the whereabouts of the item. AB 2296
(Baker, Chapter 340, Statutes of 1982) clarified the statute of
limitations for these causes of action and specified that the
statute would run upon the discovery of the whereabouts of the
article. In 1989, the Legislature, at the request of museums
attempting to recover stolen art and artifacts, extended the
statute of limitations to apply to actions for the recovery of
any article of historical, interpretive, scientific, or artistic
significance. (SB 1233 (Rogers, Ch. 467, Stats. 1989).)
After 1983, courts wrestled with applying a discovery rule for
these types of actions. Some courts imposed an actual notice
discovery rule whereby the statute of limitations did not begin
to run until the plaintiff discovered the whereabouts of the
article. (See Naftzger v. American Numismatic Society (1996) 42
Cal.App.4th 421.) Other courts applied a constructive discovery
rule under which the statute of limitations began to run at the
time the plaintiff discovered or should have discovered the
whereabouts of the article, based on the definition of
constructive notice provided in Jolly v. Eli Lilly & Co. (1988)
44 Cal.3d 1103. (See Society of California Pioneers (1996) 43
Cal.App.4th 774; Orkin v. Taylor (2007) 487 F.3d 734; Von Saher
v. Norton Simon Museum of Art at Pasadena (2008) 592 F.3d 954.)
This bill would clarify the discovery rule on actions for theft
of property prior to 1982. This bill also would provide for an
actual discovery rule and a six-year statute of limitations of
actions against a museum, gallery, auctioneer, or dealer for the
specific recovery of articles of historical, interpretive,
scientific, cultural, or artistic significance from a museum,
gallery, auctioneer, or dealer. This bill would revive
previously dismissed actions and apply to appeals of cases
dismissed for the expiration of the statute of limitations in
effect at the time of the dismissal.
CHANGES TO EXISTING LAW
Existing law provides a statute of limitations of three years
for actions to recover stolen personal property. (Code Civ.
Proc. Sec. 338(c).)
Existing law provides that the statute of limitations pertaining
to the recovery of stolen articles of historical, interpretive,
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scientific, or artistic significance begins to accrue upon the
plaintiff's discovery of the whereabouts of the stolen article.
(Code Civ. Proc. Sec. 338(c).)
This bill would extend the statute of limitations from three
years 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 would provide that the statute of limitations for
actions against a museum, gallery, auctioneer, or dealer for
specific recovery of an article of historical, interpretive,
scientific, cultural, or artistic significance 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 would apply a six-year statute of limitations and
actual discovery rule to actions for property taken by theft
prior to 1982 against a museum, gallery, auctioneer, or dealer
for specific recovery of an article of historical, interpretive,
scientific, cultural, or artistic significance, regardless of
whether or not the action would otherwise have been barred by an
applicable statute of limitation under any other provision of
law in effect prior to 1982.
This bill would authorize the revival of actions, and would
apply to pending actions including an appeal from a prior
dismissed action, against a museum, gallery, auctioneer, or
dealer for specific recovery of an article of historical,
interpretive, scientific, cultural, or artistic significance
that would have satisfied a six-year statute of limitations
based on the actual discovery of the whereabouts of the article
and the facts constituting the cause of action. The revival of
or application to such actions must have been dismissed in whole
or in part upon the expiration of the statute of limitations
existing at the time of the dismissal.
COMMENT
1. Stated need for the bill
The author writes:
This bill addresses a problem faced by persons who are
attempting to recover art and other valuable objects that may
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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 confusion of the two appellate court rulings on
these questions.
2. Legislative history of protecting victims of artifact theft
In 1983, the Legislature provided for a statute of limitations
for actions based on theft of art or an artifact to accrue upon
the discovery of the whereabouts of the article. (AB 2269
(Baker, Ch. 340, Stats. 1982).) AB 2269 was enacted to address
the difficulty in locating stolen art which was transferred
underground for years after it was taken from the original
owner. The statute of limitations was revised to accrue on the
date of the discovery of the whereabouts of the artifact rather
than on the date of the theft. In 1989, the Legislature
replaced "art or artifact" with "any article of historical,
interpretive, scientific, or artistic significance." (SB 1233
(Rogers, Ch. 467, Stats. 1989).) This revision was made in
order to protect theft victims seeking to recover items of
significant historical or artistic value, but with very little
financial value.
In 2002, the Legislature enacted a law which provided a
mechanism under which victims of Nazi oppression could recover
works of art. (AB 1758 (Nakano, Ch. 332, Stats. 2002).) This
law removed the statute of limitations requirements for these
types of actions and allowed plaintiffs to file their actions by
December 31, 2010. (Code Civ. Proc. Sec. 354.3.). A recent
Ninth Circuit appellate ruling in Von Saher v. Norton Simon
Museum of Art at Pasadena (2008) 592 F. 3d 954 held that this
statute was preempted by the federal government's powers over
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foreign affairs under the Supremacy Clause.
Von Saher is currently before the U.S. Supreme Court for a
decision regarding this preemption; the appeal does not,
however, deal directly with the statute of limitations changes
proposed by this bill. The Ninth Circuit advised the plaintiff
that she could amend her complaint alleging satisfaction of the
three-year statute of limitations for the recovery of stolen
articles of artistic significance under Code of Civil Procedure
Section 338(c). It is not clear whether this plaintiff will be
able to meet this burden.
3. Due diligence by plaintiff
This bill would extend the statute of limitations from three to
six years for actions against museums, galleries, auctioneers,
and dealers for specific recovery of articles of historical,
interpretive, scientific, cultural, or artistic significance.
Generally, statutes of limitations are deadlines created for
consistency for both plaintiffs and defendants. Plaintiffs must
utilize due diligence in discovering facts giving rise to their
claims and thereafter file actions on these claims within the
time specified by statute. This bill would extend the time
within which plaintiffs must diligently discover their claim and
file suit against specified defendants. This extension is
appropriate because U.S. law favors the theft victim. However,
a reasonable cap, in this case six years, on the timeframe
within which to bring an action for the recovery of a stolen
item then protects the subsequent good faith purchaser of the
item.
4. Due process for good faith purchaser
This bill seeks to revive dismissed actions and affect pending
appeals thereon with respect to its provisions for the six-year
statute of limitations as applied to actions against museums,
galleries, auctioneers, and dealers. As explained below, this
provision is not contrary to due process protections.
The court in Naftzger v. American Numismatic Society, supra, 42
Cal.App.4th 421 noted that a thief cannot transfer good title.
(Id. at 428.) Therefore, the subsequent good faith purchaser
has no claim to good title during the accrual of the statute of
limitations. Upon the expiration of the statute of limitations,
however, courts have found that title to real or personal
property may have perfected itself, and legislative acts that
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remove from the defendant title to the property effectively
deprives the defendant of due process. "The reason is, that, by
the law in existence before the repealing act, the property has
become the defendant's. Both the legal title and the real
ownership had become vested in him, and to give the effect of
transferring this title to plaintiff, would be to deprive [the
defendant] of his property without due process of law."
(Campbell v. Holt (1885) 115 U.S. 620, 623.)
However, in Chase Securities Corp. v. Donaldson, et al. (1945)
325 U.S. 304, the court clarified the holding in Campbell and
reasoned that "it cannot be said that lifting the bar of a
statute of limitation so as to restore a remedy lost through
mere lapse of time is per se an offense against the Fourteenth
Amendment." (Id. at 315.) The Chase Securities court stated
that retroactive statutes could create a hardship or oppression
as applied to the defendant, who could have relied on the
expiration of the statute to his substantial detriment. The
revival provision of this bill, however, can be distinguished
from instances which unduly burden the defendant. This bill
seeks to provide a remedy for plaintiffs who lost artifacts
through no fault of their own. For many of these plaintiffs,
the artifacts that were taken were done so through looting,
oppression, duress, and theft. Many of these items move
underground through various channels and transfer to owners
until the items resurface at some later point, and it is
difficult for these plaintiffs to trace the items to the current
owners.
Further, the defendants who would be affected by the revival
provisions of the bill (museums, galleries, auctioneers, and
dealers) are those who are sophisticated in the types of
artifacts at issue, have access to methods of tracing artifact
provenance, and could be seen as merely good faith purchasers
rather than bona fide purchasers. "Bona fide purchaser"
includes in its definition the taking of property without any
knowledge of an adverse claim. In San Francisco Credit Clearing
House v. C.B. Wells (1925) 196 Cal. 701, the court held that a
person who purchases from one who has no right to sell cannot be
considered a bona fide purchaser of goods. Pursuant to the rule
of caveat emptor, the law imputes notice to the good faith
purchaser; "he is conclusively presumed to have ascertained the
true ownership of the property before purchasing it." (Id. at
706-707.)
Many times, lost artifacts have a break in the chain of title.
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For this reason, these museums, galleries, auctioneers, and
dealers should be considered on notice that provenance to the
artifact has not been thoroughly established and should expect
an adverse claim by owners and their heirs staking claims
originating during the missing time period. It is important to
note that the provisions of this bill do not relate to the
merits of the plaintiff's case; rather, this bill simply extends
the deadline by which the plaintiff may file an action.
The Legislature has numerous times before revived claims and
made statute of limitations changes retroactive: AB 600 (Knox,
Ch. 827, Stats. 1999, insurance claims of Holocaust victims); SB
1245 (Hayden, Ch. 216, Stats. 1999, World War II slave labor);
SB 1899 (Burton, Ch. 1090, Stats. 2000, Northridge earthquake
claimants); SB 1915 (Poochigian, Ch. 543, Stats. 2000, Armenian
genocide victims); AB 1758 (Nakano, Ch. 332, Stats. 2002,
Holocaust-era artwork); AB 2913 (Firebaugh, Ch. 1070, Stats.
2002, Bracero workers); SB 688 (Burton, Ch. 688, Stats. 2002,
9/11 victims); SB 1779 (Burton, Ch. 332, Stats. 2002, childhood
sexual abuse); and SB 1678 (Dunn, Ch. 741, Stats. 2004, sexual
abuse of minors). These are sympathetic cases whereby the
importance of protecting the victims' rights supersedes the
hardship of defending a potentially stale action by the
defendants.
Similarly, this bill would help to provide protection for
victims that the Legislature has already intended to protect.
AB 1758 removed the statute of limitations requirements for
these actions and allowed plaintiffs to file their actions by
December 31, 2010. (Code Civ. Proc. Sec. 354.3.) However, a
subsequent Ninth Circuit appellate ruling in Von Saher v. Norton
Simon Museum of Art at Pasadena, supra, 592 F. 3d 954 held that
this statute was preempted by federal powers over foreign
affairs under the Supremacy Clause. Victims who relied upon the
provisions of Code of Civil Procedure Section 354.3 and failed
to file their claim based on a different statute of limitations
are now prejudiced in bringing their actions. This bill would
provide the necessary remedy for these victims and other victims
of historical art theft by allowing them to file their actions
based upon the statute of limitations created by this bill.
Since the revival provisions of this bill affect only actions
for specific recovery under a statute of limitations, the issue
of laches is inapplicable.
To provide defendants with some amount of consistency in the
law, the committee may wish to consider whether to amend the
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bill to include a five-year cut off date for the revival of
actions. The following amendment would accomplish this:
Suggested amendment
Page 4 line 13 after "prejudice," add "and must be commenced
within five years of the effective date of this section,"
5. Actual notice v. constructive notice
This bill would declare an actual notice discovery rule for
actions against a museum, gallery, auctioneer, or dealer for
specific recovery of an article of historical, interpretive,
scientific, cultural, or artistic significance. The statute of
limitations would begin to run upon the discovery of the
whereabouts of the article and the facts constituting the cause
of action. The author cites the case in Naftger v. American
Numismatic Society (1996) 42 Cal.App.4th 421, wherein the court
held that an actual discovery rule applied to an action of a
museum against an ex-employee for the return of stolen coins.
The court reached this decision while pondering the application
of the pre-1983 statute of limitations, which did not specify
when the statute of limitations began to run - at the moment the
coins were stolen or at the moment the museum realized the
whereabouts of the coins. The court applied an actual discovery
rule because the museum could not have known the exact
whereabouts of the article until the defendant came forward with
this information.
This bill, though silent on this provision, applies a
constructive discovery rule for actions brought against an
individual, which conforms to more recent holdings regarding
California's statute of limitations on stolen art work. (See
Society of California Pioneers (1996) 43 Cal.App.4th 774; Orkin
v. Taylor (2007) 487 F.3d 734; Von Saher v. Norton Simon Museum
of Art at Pasadena (2008) 592 F.3d 954.) Concern has been
raised that plaintiffs suing individuals for the recovery of
stolen art work would not have the benefit of actual discovery,
but would have to defend what they knew or should have known
about the whereabouts and claim to ownership. The author argues
that this discovery rule is adequate to protect plaintiffs since
individual defendants are less sophisticated than museums,
galleries, auctioneers, and dealers and have less ability to
fully research the provenance of the article at issue.
Additionally, this bill separates actions for taking, detaining,
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or injuring any goods or chattel, including actions for specific
recovery of personal property, into a separate section and does
not provide any discovery rule for these actions. Carla
Shapreau, Esq., a supporter of this bill with extensive
expertise on claims for the recovery of historic artifacts,
suggests amending the bill to provide a constructive discovery
rule for these types of actions. Ms. Shapreau argues that
failing to provide any discovery rule for these actions
"arguably cuts back on the current protection theft victims now
enjoy under Naftger v. The American Numismatic Society and
appears to undermine advancements in California law as
California courts have repeatedly adopted a discovery accrual
rule as a fair means of limitations administration." (Citations
omitted.)
6. Definition of "dealer"
This bill would define "dealer" as a person principally engaged
in selling "works of fine art or antiquities." Ms. Shapreau
raised the concern that this definition was too limited and does
not comport with the rest of the provisions of the bill. This
bill would provide specific actions against dealers relating to
articles of historical, interpretive, scientific, cultural, or
artistic significance. Yet, articles of historic or scientific
value would not be included within "works of fine art or
antiquities." To address this concern, the author agreed to
accept the following clarifying amendment:
Suggested amendment :
On page 3, line 37 after "art" delete "or antiquities" and
insert ", antiquities, or articles of historical,
interpretive, cultural, or artistic significance."
7. Application to property taken prior to 1982
This bill would clarify existing law that the statute of
limitations for actions based on property taken by theft prior
to 1982 would begin to accrue at the time of the discovery of
the whereabouts of the article. The author states that one of
the goals of this bill is to clarify the discovery rule that
courts have wrestled with for many years. As decided in
Naftger, the whereabouts of the property is the date that starts
the running of the statute of limitations.
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Support : Two Individuals
Opposition : None Known
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation : See Background; Comment 2.
Prior Vote :
Assembly Judiciary Committee (Ayes 10, Noes 0)
Assembly Floor (Ayes 74, Noes 0)
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