By Kurt R. Mattson

The work in dispute is one of two major versions or "editions" of a project created by Arakawa and his personal and artistic partner, writer and artist Madeline Gins. The project entitled, The Mechanism of Meaning, is made up of roughly 80 painted panels and other elements, and each evolved over time.

The plaintiff, Architectural Body Research Foundation (the Foundation), and the estate of Gins (the Estate) both claimed to be the rightful owner of this "conceptual work of art."

Gins died in January 2014, and Arakawa predeceased her. Gins's will left the bulk of her estate — including the disputed work to the defendant, Reversible Destiny Foundation. (RDF). The Foundation sued RDF, the Estate, and its executors, seeking the immediate return of the work, a declaration that it was its "sole and exclusive owner," and damages for copyright infringement.

U.S. Magistrate Judge Barbara Moses heard RDF’s motion to dismiss all the claims, which was premised on the probate exception, which precludes federal courts from trying to dispose of property that’s in the custody of a state probate court.

The Artists Give The Mechanism of Meaning to the Foundation
In 1987, the artists deeded the artwork to the Foundation, a non-profit foundation formed by Arakawa and Gins at the time. The Deed transferred to the Foundation "all right, title, and possession, including literary rights including copyright," to the works "more fully described in Schedule A." The schedule identified the property being transferred as The Mechanism of Meaning, and went on to describe, in some detail, 82 individual painted panels, each of them 5 feet 8 inches by 8 feet.

However, the Deed didn’t mention that there was more than one edition of the property being gifted. Nor did it list any physical components of the gift other than the panels described in the schedule—even though The Mechanism of Meaning was an "ongoing work," which existed "in different mediums, including a series of publications, drawings and paintings."

The Foundation sold another edition (the Sezon Edition) to the Sezon Museum of Modern Art in Japan for $3 million in 1989. According to the sales agreement, signed by Gins, the Foundation conveyed "1 set of the Mechanism of Meaning," including "81 paintings, 45 drawings, and 1 architectural model." The Sezon Edition, completed in 1988, was "the second of the two large editions" of The Mechanism of Meaning created by Arakawa and Gins.

But Who Owns the “Estate Edition”?
The issue before the court was the ownership of the other edition, which stayed in the artists' possession. RDF claimed that this edition was an asset of Gins's Estate (the Estate Edition). During their lifetimes, the artists continued to modify the Estate Edition and primarily treated it as their personal property, including the associated intellectual property.

The artists personally loaned the Estate Edition to the Guggenheim Museum in 1996 for an exhibition. The loan agreement, which ran between the artists and the museum, described the loaned work as “The Mechanism of Meaning (84 paintings)” and didn’t mention the Foundation. The Guggenheim catalog for the exhibition said that the art was from the artists' collection.

Also, the Foundation’s informational federal and state returns were usually signed by Gins and/or Arakawa, but none listed any edition (or any other artwork) as part of the Foundation's assets. Nor was there any mention of the sale of the Sezon Edition. However, starting in 1997, the Foundation reported that the Guggenheim had exhibited the Foundation's work, but didn’t mention the paintings, which (according to the Guggenheim catalog) were the heart of The Mechanism of Meaning — and belonged to the artists themselves.

When Arakawa died intestate on May 12, 2010, Gins, acting as his administrator, signed estate tax returns reporting that Arakawa owned artwork valued at more than $27 million at the time of his death—including “Mechanism of Meaning Paintings,” which was appraised at $4,980,000 by a New York firm.

When Gins died, her will was probated in the Surrogate's Court for the County of New York, which appointed three of the individual defendants as her executors. In 2014, the executors removed her extensive art collection — including the Estate Edition— from her home to an art storage facility, where it remained. There was no evidence that the Estate Edition was segregated or labeled in any way that suggested it was not Gins's personal property.

Gins’ Estate Lists Appraised Edition in Inventory
When the Estate filed an inventory with the Surrogate's Court, they included $9,642,934 in "Miscellaneous & Trust Property" consisting of "Artwork created by the decedent, her deceased spouse Shusaku Arakawa, and others." The $9.6 million figure was based on a 2015 appraisal that the Estate didn’t file in the Court but did produce in this case.

According to the appraisal, the fair market value of "Mechanism of Meaning Paintings" was $4,980,000 "before blockage discount," and $1,245,000 "after blockage discount." The appraisal explained that "blockage" is a discount applied to the value where a quantity of very similar properties would affect a market. The Mechanism of Meaning received a blockage discount of 75% because the artists "considered these paintings to be their most important works," but "there have been no auction sales of these works in the past five years," and "[t]here are 85 remaining paintings in this series."

Except for some cash bequests, Gins's will left the balance of her estate to RDF. RDF was formed by Arakawa and Gins shortly before Arakawa's death. During their lifetimes, the artists, along with nonparty Momoyo Homma, served as directors of both of the foundations they created that are the parties in this case. With the artists' deaths, Homma remained as a director of both foundations but appointed Johanna Post and her husband Andrew MacNair (both long-term associates of the artists) to the Foundation board. The RDF board now includes Homma, defendants Spencer and Govan, and nonparty Alexandra Munroe, a senior curator at the Guggenheim.

The Foundation Wants Estate Edition Back
In October 2015, Foundation director MacNair emailed the executors of the Estate, stating, "It appears that the Estate of Madeline Gins has possession of assets that belong to Foundation, Inc.," referencing The Mechanism of Meaning. He requested "a return of Foundation assets in the current inventory of the Estate of Madeline Gins." The Estate rejected the request.

The Foundation claimed that when the artists gifted The Mechanism of Meaning to it, they intended to transfer all right, title, and interest to each and every edition of the work, past and future, as well as all associated copyrights. The Foundation argued that the Estate Edition wasn’t now rightfully owned by her Estate and couldn’t be bequeathed to RDF.

Defendants contended that only the Sezon Edition was gifted to the Foundation by means of the 1987 Deed; that the Estate Edition was Gins's personal property at her death; and therefore, that it was now properly included in her Estate.

The Foundation argued that the Estate Edition couldn’t be "in the custody of a state probate court," because the Estate didn’t own it. It also submitted a declaration by the attorney who drafted the Deed in 1987. She said the Deed was intended to "capture[ ] all of the works then related to the project, and any future manifestations of it." Thus, she wrote, the Deed "would have been understood by the parties to apply to both the first and second editions."

Can the Federal Court Hear the Case?
Judge Moses explained in her opinion, quoting the U.S. Supreme Court, that the probate exception “reserves to state probate courts the probate or annulment of a will and the administration of a decedent's estate; it also precludes federal courts from endeavoring to dispose of property that is in the custody of a state probate court. But it does not bar federal courts from adjudicating matters outside those confines and otherwise within federal jurisdiction.”

The Second Circuit Court of Appeals Court also said “so long as a plaintiff is not seeking to have the federal court administer a probate matter or exercise control over a res in the custody of a state court, if jurisdiction otherwise lies, then the federal court may, indeed must, exercise it.”

The threshold question was whether the disputed property was in the "custody" or under the "control" of the state probate court." The judge said it was.

The parties agreed that the Estate Edition was in the possession of the Estate and under the control of her executors, who — pursuant to the letters testamentary granted to them by the Surrogate's Court — arranged for the physical artwork to be appraised, inventoried, and secured in a climate-controlled art storage facility along with the rest of Gins's art collection. 

The Foundation’s claims of conversion and replevin couldn’t be pursued against the Estate unless it had "possession" of the disputed property, the judge said. When the court-appointed executors of an estate take possession of property on its behalf, that property is deemed to be within the custody of the court that authorized them to do so. The Estate Edition is personal property, the judge held, capable of being physically possessed, and it remained in Gins's full possession until her death.” Thereafter, the property passed into the possession of her duly-appointed executors, thus becoming an asset of her Estate, the judge ruled— within the custody and control of the Surrogate's Court — until and unless a court of competent jurisdiction says otherwise.

Judge Can’t Order Estate Edition Back to Foundation
Judge Moses said she couldn’t “say otherwise” because the language of the Deed was “less than crystal clear.” Even an attorney who attested to his efforts to sell the Estate Edition for the Foundation acknowledged that when he first read the Deed, he understood it to convey "only one of the two copies of the Mechanism of Meaning."

The fact that “a trained lawyer should so interpret the Deed upon a first reading suggested that the significantly different interpretation that the Foundation now champions is not entirely indisputable.” Plus, the artists themselves displayed some inconsistency as to whether the Foundation owned all of the editions. Judge Moses opined that many probate exception cases include claims (like the Foundation's) that an estate has wrongful possession of property rightfully owned by the plaintiff. The probate exception turns on whether the state court has "custody" or "control" of the property — not whether the estate has good title to it.

Having determined that the Estate Edition (including associated copyrights) was within the custody or under the control of the Surrogate's Court, Judge Moses found the Foundation's state-law claims for conversion and replevin sought to "dispose" of that property. The judge said that these were classic property claims that, if successful, would result in an order requiring the executors to convey specific assets out of the Estate to the Foundation. As a result, the probate exception barred Judge Moses in federal district court from issuing that order.

The Foundation also asked the Court to declare that it was “the sole and exclusive owner” of the artwork “in its entirety.” But again, the judge said that such a judgment would dispose of specific property in the custody of a state probate court, making the requested relief "virtually indistinguishable" in substance from the relief sought in the conversion and replevin claims, which were beyond the reach of the Court.

Judge Moses wrote that under similar circumstances, federal courts regularly dismiss declaratory judgment claims asserting ownership over specific estate assets. Therefore, the declaratory judgment claim and the claims for conversion and replevin had to be dismissed without prejudice for refiling in state court. 

As Magistrate, Judge Moses recommended to the District Court that it dismiss all claims against the Estate; dismiss the Foundation’s conversion, replevin, and declaratory judgment claims; and dismiss the Foundation’s copyright infringement claim. Architectural Body Research Found. v. Reversible Destiny Found., Inc., 2018 U.S. Dist. LEXIS 145678 (S.D.N.Y. August 27, 2018).

About the Author
Kurt R. Mattson is the President of Union Legal Research. He is the former Director of Library Services and Continuing Education at Lionel Sawyer & Collins in Las Vegas. Prior to this, he worked at BNA and other legal publishers, spending a substantial portion of his career working for Thomson Reuters. He serves as a consultant for several businesses, law firms, and marketing companies.

Kurt received his JD from William Mitchell College of Law and his Masters of Law (LLM) from George Washington University. He received his Masters of Library Information Science (MLIS) from Wayne State University. Kurt is the editor of Lexis’ BSA/AML Update, co-author of A.S. Pratt’s Mortgage Procedure Guide to Federal and State Compliance, and author of Fair Debt Collection Practices: Federal and State Law and Regulation. He is also a contributing author of Brady on Bank Checks. Kurt is also a contributor to other business and legal publications.

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