10 artful questions: A primer on Berkshire Museum's legal issues

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PITTSFIELD — Which of the following are expected to figure into legal arguments in Berkshire Superior Court on Wednesday?

A. Irreparable harm.

B.Charitable intent.

C. Public interest.

D. Fiduciary duty.

Answer: All of the above.

At 11 a.m., the Pittsfield courtroom will offer a crash course on public charities law, as attorneys debate a $60 million question: Should the Berkshire Museum be allowed to sell art?

That's the question Judge John Agostini must answer when considering two lawsuits that seek a preliminary injunction against the sales, set to begin Nov. 13 at Sotheby's in New York City.

As a primer for readers, The Eagle explores questions about the proceedings.

QUESTION: What exactly is the issue before Judge Agostini?

ANSWER: It's simple, really: whether the court should provide what's known as a "provisional remedy" to plaintiffs who seek to block the sales. An injunction would seek to preserve the status quo in a way that doesn't injure either side, giving time for bigger legal questions to be resolved.

But such a pause isn't seen by all as harmless. Expect the museum's lawyer to argue that postponing the Sotheby's sales could lessen future prices for the artworks, as its chief operating officer claims in an affidavit.

Agostini must balance those interests. If he orders a pause, he must also find that the plaintiffs stand a good chance of prevailing in a fuller legal review.

Q: What are the stakes?

A: For the museum and Sotheby's, the goal is to survive an eleventh-hour legal challenge and bring 19 works to one of the most prominent art markets in the world, cementing a key step toward its vision of a new kind of science and natural history museum freed from yearly budget struggles.

For opponents of the sale, it's a last-ditch effort to keep some of the most coveted works in a remarkable art collection in Pittsfield.

Q: The Attorney General's Office weighed in with a filing this week. Who does that help?

A: The plaintiffs fighting the sales found a powerful legal ally. The AG's office filed a response Monday that asks the court to grant it more time to study the legality of the museum's art sale by postponing the art auctions.

Michael Keating of Foley Hoag, the attorney for a group of plaintiffs, including three sons of artist Norman Rockwell, called the filing "a great development for us."

But the matter is not settled just because "the people's lawyer" has spoken. It will be up to Agostini to evaluate whether opponents of the art sale have the law on their side. By statute, the AG's office is duty-bound to protect charitable assets, such as those owned by the museum.

That lends significance to the argument laid out by three assistant attorneys general — Courtney M. Aladro, Emily T. Gabrault and Andrew M. Batchelor.

Keating says he only learned Monday that the office would side with his clients.

In responses of its own in the past week, the museum's legal team argues that financial need drives its change in strategy. It says the plaintiffs don't have legal standing to sue, and that the museum has the right to sell the works.

Q: What is the AG's office actually examining — and why does it need more time?

A: In a statement Monday, the museum's lawyer questioned why Maura Healey's office needs more time.

"For more than four months, the museum has cooperated fully in providing documents and information to the Attorney General's Office," said William F. Lee of WilmerHale.

But in its Monday filing, the Attorney General's Office challenged the notion of "cooperated fully." It faults the museum for not informing it, in a June letter, of issues — some dating more than a century — related to restrictions on art sales.

Since midsummer, the AG's office says, it has met with museum officials in Pittsfield, conducted more than 20 "informational interviews" and talked to the museum's lawyer by phone more than 20 times.

On top of that, it has been contacted by more than 400 people interested in the outcome, one of whom helped direct the office to the 1871 act of the Legislature that the office now believes restricts the sale of any artworks acquired by the museum before 1932.

And it was only last week, on Oct. 24, the office says in its filing, that the museum produced some documents it had requested Aug. 18. "The AGO is still in the midst of completing that document inspection," the filing says.

It asks the court to give it time, through a restraining order or preliminary injunction, "to consider these important issues and what impact they may have on the ability of the Museum to sell the art."

Q: Is it only about whether the museum has the legal right to sell specific works?

A: No. The Attorney General's Office is looking, in a more holistic way, at whether the museum and its trustees exercised "due care in coming to major decisions."

That leads the office to consider what's called the "fiduciary duty" of trustees to act in their organization's best interests.

Because the AG's review is not complete, the brief its lawyers filed hedges on certain issues.

Toward the end, their argument says, in effect, that the judge doesn't have to parse matters the office itself is still mulling.

The brief refers the judge to case law establishing that a court need only find "a likely statutory violation which adversely affected the public interest."

It goes on, "There is substantial evidence to show that if the Museum were to proceed with the proposed sale it may violate constructive trusts placed on these objects, which result from the 1871 Athenaeum Charter, the circumstances surrounding Rockwell's gifts to the museum, and the abandonment of the Museum's art purpose."

To go forward, the state's lawyers say, the museum would have to prove to a court that, without the art sales, it would be "impossible or impracticable" for it to continue to exist.

The museum argues that it has made that very argument. "If the Museum continues on its current trajectory, it will, without question, be forced to close," according to a brief it filed last week.

And on the issue of "fiduciary duty," the museum's legal team says it is in the clear, pointing to two years of work by a board that "engaged in an exhaustive, diligent process to develop and fund a New Vision for the Museum."

Q: The museum's attorney, Mark Gold, informed the AG's office in a June letter that none of the 40 works to be removed from the collection faced any "restriction" preventing their sale. Is that statement true?

A: That's expected to be a central point of debate Wednesday.

The museum and its litigator, Lee, believe law is on their side. "We continue to believe that there is no legal barrier to the museum proceeding with the deaccession. ... We look forward to presenting those arguments in court," Lee said in a statement Monday.

The plaintiffs and the Attorney General's Office believe that a restriction set by the Legislature in 1871 continued into 1932, when the Legislature separated the museum from its longtime parent organization, the Berkshire Athenaeum.

In a surprise move, more than half of the original works headed to auction recently dropped off Sotheby's schedule. The museum and Sotheby's said the other called the shots on that. But the change might have stemmed from a realization that the sale of works donated before 1932 faced restrictions after all.

Not so, says the museum in a filing. "None of the 40 deaccessioned works contains any restriction on the Museum's ownership or disposition," it reads.

Expect that to be voiced by its attorney in court Wednesday. As proof, the museum provided the court with copies of 38 of the 40 accession slips for the works to be sold. While slips for some other works note restrictions on deaccession, these 38 do not.

Further, Lee disputes that the 1871 state law creating the Berkshire Athenaeum binds the museum "for the simple reason that the statute incorporating the Museum contains no such limitation."

Neither does the brief bit of legislation lift that earlier restriction.

The works the museum wants to sell, Lee maintains, were given to the museum, not the library, and are listed in the collections ledger of the museum, not the Athenaeum.

Q: But the sales of as many as 19 works are still planned. Are they eligible for sale?

A: In its brief, the Attorney General's Office asks for time, in part because it wants to sort out issues related to that time period.

The museum says, again, that it has the legal green light to proceed.

Q: Isn't this sale really all about two paintings? The ones Norman Rockwell gave to the museum?

A: On a dollars-and-cents basis, yes. Sotheby's estimates that "Shuffleton's Barbershop" and "Shaftsbury Blacksmith Shop," which the artist gave to the museum in 1958 and 1966, could together bring bids of $40 million, two-thirds of the amount the museum seeks to raise for renovations and to build its endowment.

Sotheby's makes plain that the Rockwell work is a centerpiece of the Nov. 13 auction. It features the paintings prominently, and at length, in its online and print catalogs and flew the works to be seen by prospective bidders in London and California. They are even featured on Manhattan billboards.

Q: Did Rockwell make clear to the museum he wanted it to keep the paintings forever?

A: Not in writing. The museum and Sotheby's believe they are not restricted. While Rockwell family members have a letter to their father from a museum director saying "Shuffleton's Barbershop" would be put in the permanent collection, that is not bulletproof evidence of a donor's intent.

In its brief, the AG's office makes a circumstantial case that Rockwell would have wanted his works to remain available for public viewing. After deaccession arose as an issue in the art world, he was more attentive to recording his wishes.

But not in 1958. And not with the Berkshire Museum, perhaps because of his trust in the institution, the attorney general's brief points out.

But the museum says that the accession slip for Rockwell's "Shuffleton's Barbershop" does not mention any restriction. Nothing in the 1958 thank-you letter from museum Director Stuart Henry to Rockwell, the museum's lawyer says in a brief, "states the gift was conditional, what the supposed condition was, or what would happen in the supposed condition was not satisfied."

Attempts to use the letter as proof of a restriction, the museum says, is "unsupported and unsupportable."

Q: What sort of financial penalty might the museum face if the auctions are canceled?

A: This answer remains shrouded. In his June letter to the AG's office about the deaccession, Gold, the museum's lawyer, said his client received favorable terms from Sotheby's. But whether that extends to favorable terms for withdrawal from the sale is uncertain.

The AG's brief includes the Sotheby's consignment contract as an exhibit, but the document is redacted from public view. At one point, the brief, prepared by lawyers who had, no doubt, studied the Sotheby's contract, notes that the museum was "committed to a contract that carried with it the threat of significant financial penalties should the Museum withdraw any pieces of art."

In its legal filings, though, the museum does not cite any such penalty as a harm it would suffer if the court granted a preliminary injunction.

Larry Parnass can be reached at lparnass@berkshireeagle.com, at @larryparnass on Twitter and 413-496-6214.


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