DALLAS (CN) - The son of late socialite and philanthropist Wendy Russell Reves cannot pursue the Dallas Museum of Art over her $400 million art collection, the 5th Circuit ruled.
A three-judge panel with the New Orleans-based appeal court affirmed U.S. District Judge Jane Boyle's dismissal of the suit filed by Arnold Schroeder Jr.
"Schroeder asserted claims for constructive fraud against each defendant but failed to state a cognizable claim for relief under Texas law," the unpublished opinion states. "We agree with the district court that Schroeder did not plead sufficient facts to demonstrate the existence of any legal or equitable duty owed by the defendants that would give rise to such a claim."
Reves' art collection, which she inherited from her late husband Emery Reves, included works by Van Gogh, Manet, Cezanne and Renoir, according to the complaint.
A former fashion model, Reves' death in March 2007 at the age of 91 was the subject of newspaper coverage on both sides of the Atlantic. Schroeder claimed that the museum and its board members took advantage his mother in her final years at her mansion in France to take possession of her collection for the museum.
"Wendy, by now a lonely widow and chronic alcoholic, was persuaded by their Texas charm and flattery to disregard Emery's intentions for the collection and donated it instead to the DMA," the complaint stated. "As described above, Emery had wished for Villa La Pausa to be converted to a museum to display the collection publicly in France within its natural surroundings. Instead, the DMA Members convinced Wendy that Emery's spirit would be as appeased if the DMA built a replica of several of the rooms of Villa La Pausa within the museum in which the Collection would be displayed, which is in fact what the DMA ultimately did."
To circumvent France's compulsory heirship rule and restrictions set forth in Emery's various tax-avoidance vehicles, the conspirators "schemed to strip away these legal protections and asked Wendy to sign various documents to execute a series of sham transfers that purported to move the collection ... to the DMA," the complaint stated.
To do this, Schroeder said, the defendants created an entity in Texas, the Wendy and Emery Reves Foundation (WERF). Then they asked his mother to sign a donation agreement between the organization and the museum.
"Once the DMA received the collection, WERF (Texas) was dissolved, with the result that the DMA purported to actually acquire title to the works of art," the compliant stated. "However, WERF (New York) is still in existence.
"Subsequently, the Collection was packed up from Villa La Pausa in plain boxes without identifying labels and flown by private jet to Texas. Thus, $400 million of unique artifacts and paintings quietly disappeared from France and neatly evaded French taxes that would have been as high as 60 percent. In fact, the DMA states in the forward to a catalogue of the Collection that this was a gift by Wendy of 'her collection.'
"In addition to defrauding the French government, this stealth transfer was designed to defraud the plaintiff from his half-share of the collection under rigid French laws regarding lifetime gifts in the context of reserved heirship."
Reves also made generous charitable cash contributions, including a $2 million endowment to the Susan G. Komen Breast Cancer Foundation and UT Southwestern Medical Center, $3 million for the establishment of the Wendy and Emery Reves Center for International Studies at the College of William & Mary and $2 million to the Morton H. Meyerson Symphony Center in Dallas. The plaintiff went after these, as well, but was rebuffed by the appellate court.
"Schroeder also argued that the defendants are liable through theories of civil conspiracy and aiding and abetting, and he requested an accounting of property and imposition of a constructive trust," the opinion stated. "These claims rise and fall with his constructive fraud claim and, accordingly, were properly dismissed by the district court."
In August, Akin Gump sought to quash subpoenas by Schroeder. The Dallas-based law firm said Schroeder's earlier lawsuit in French court for his mother's mansion backfired and he was trying to relitigate his claims.
"Schroeder attempted to claim rights as a 'forced heir' under French law to one-half of her estate, and further tried to make that estate as large as possible by claiming ownership of assets not belonging to Ms. Reves," the law firm's motion to quash stated. "As part of that strategy, in 2008, Schroeder filed an adverse possession action in Nice, France, against [plaintiff] SCI La Pausa, claiming that Villa La Pausa should be part of the estate and thus part of his inheritance."
The French trial court rejected his claim to the property and granted SCI's counterclaim, awarding 523,000 euros in compensatory damages. In 2011, a French appeals court upheld the ruling and added 1.22 million euros in compensatory damages and interest, the law firm said.
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