AG's legal options limited in Berkshire Museum case; art sale opponents regroup

The Berkshire Museum, Wednesday, July 12, 2017.

PITTSFIELD — Back in September, the Attorney General's Office was just a few weeks into a "review" of the Berkshire Museum's proposed art sales. The office suggested privately to museum officials they might need a court's permission.

That wasn't welcome advice four months ago.

But on Friday, that same remedy provided a breakthrough in one of the art world's most high-profile battles.

If it succeeds in a petition to the Supreme Judicial Court, the museum will be back in the driver's seat, able to sell premier works from its collection to heal its troubled finances.

So what was that legal fuss all about?

Interviews with attorneys and a review of correspondence and court documents suggest an answer: The state's top prosecutor, which in November lost the only court ruling to date on the issue, faced the likelihood of coming up short again, due to a state law that gives the office oversight of public charities, but limited say over how they are run.

Rather than take a stand against what the art world decried as an unethical deaccession, Healey's office appears to have clung to a narrower role in public charities law, much to the disappointment of those opposed to the sale.

"That represents a capitulation, and that is more than disappointing," Hope Davis, an art appraiser with a home in Great Barrington, said of the state's role in the agreement. "The solution is very short-sighted and very painful."

While the deal announced Friday will keep Norman Rockwell's "Shuffleton's Barbershop" accessible to the public, and include a lengthy exhibition in the Berkshires, that painting and as many as 39 other works would likely be sold to owners outside the county.

Members of Save the Art, a local group that lobbied against the sales, plan to meet Monday to discuss their options.

Lawyers for two groups of plaintiffs who fought the sales and have cases pending before the Massachusetts Appeals Court said they plan conferences Monday with their clients.

Margaret Rockwell, who manages the Norman Rockwell Family Agency on behalf of the late artist's descendants, said family members have mixed feelings about the agreement — regret, and partial relief.

"We are relieved that the Berkshire Museum and the Attorney General have come to a compromise that will keep 'Shuffleton's Barbershop' available to the American public," Rockwell said. "We regret that the painting won't stay permanently in the Berkshires."

Under the agreement revealed Friday, "Shuffleton's" would be purchased by a nonprofit museum that has agreed to loan it, 120 days after the transaction, to the Norman Rockwell Museum in Stockbridge for exhibit for up to two years.

Neither the sale price nor the buyer were identified Friday by the museum.

Elizabeth McGraw, president of the museum's board, said Friday she did not know if it will be possible to retain the other painting Rockwell gave to the museum, "Shaftsbury Blacksmith Shop."

Margaret Rockwell said the family pressed to keep "Shuffleton's" in the public realm. "If 'Shaftsbury Blacksmith Shop' and other treasures from the collection have to go to auction, then we hope a public institution will be able to purchase them," she said.

The agreement allows the museum to arrange sales that include such a provision, even if such restrictions lower their market prices. That statement protects the board from any future claim it failed to honor its fiduciary duty to the museum.

Laurie Norton Moffatt, CEO and executive director of the Rockwell museum, said her institution did not participate in settlement talks between the attorney general and the Pittsfield museum.

The Stockbridge museum was "not a party" to the agreement, she said, and only learned last week it might be called upon to play a role in the resolution of the case.

That came in the form of not-so-hypothetical question: Would it accept a loan of "Shuffleton's Barbershop" if it were purchased by another museum?

Norton Moffatt indicated the answer was easy.

"Of course the museum said that it would be very pleased to accept a loan of this very important work for as long as the prospective institution was willing to loan it," she said by email Sunday, in response to questions from The Eagle.

The deal

After floating the idea of getting a judge's approval for the art sales, through a legal doctrine known as "cy pres," Healey and her office's lawyers were sucked into a vortex of litigation.

They went from advising the museum to facing off as a plaintiff intent on holding up sales until it could complete a full inquiry.

In November proceedings before Judge John A. Agostini of the Berkshire Superior Court, Healey's office emerged as the only party with legal standing to hold up auctions that were just weeks away.

The museum had said it needed to raise $60 million or more by selling works and using the money to pursue renovations, bulk up an endowment and embrace a new kind of multimedia programming.

Last week, as a final injunction barring auctions of collection items expired, Healey's office and the museum devised an agreement that, if approved, will end their sharp disagreement over the legality of the art sales.

Healey's office made the case Friday that terms of the deal will limit art sales to $55 million, compel the museum to file reports with the state and could keep some of the 40 works in the collection.

On top of that, "Shuffleton's" would be owned by a nonprofit museum and get an extended run in Stockbridge.

But critics of the sale question why the Attorney General's Office backed away from its own assertions in court filings that museum trustees had mismanaged their affairs and that restrictions on the works prevented their sale.

"They're making a big deal of the protection of 'Shuffleton's,' which is a straw man," said Carol Diehl of Housatonic, a sale critic. "Because 'Shuffleton's' is being sold, and is leaving the Berkshires."

"We really didn't get anything," she said of community members who pressed Healey's office to halt the sales.

Leslie Ferrin of Cummington said that when members of the Save the Art group confer Monday, one of the questions they will explore is the wider impact of the agreement, on museums and public charities in the state.

"What precedent does this set and what does it mean to publicly managed assets," she asked.

In a statement over the weekend, two leading museum groups warned that the agreement could set a precedent that jeopardizes the well-being of collections.

The American Alliance of Museums and the Association of Art Museum Directors joined in a statement to call the sales the Berkshire Museum plans "a violation of the public trust" and not the right way to address money problems.

"While the negotiated agreement with the Berkshire Museum may satisfy legal standards, it falls far short of ethical standards and best practices for museums. This is indeed a sad day for the arts community in the Berkshires and the museum community across the country," the groups said.

Law's limits

Raymond Jacoub, a Pittsfield attorney who has researched legal issues related to the museum's plan and followed the case, said the deal gives trustees "most" of what they wanted.

"I can only speculate, but the terms probably favored the trustees because of ambiguity in the law," Jacoub said.

While the museum's charter included restrictions on what it can do with items in its collection, the state law that governs Healey's oversight is limited.

Jacoub notes that under Chapter 180 of the Massachusetts General Laws, the attorney general has power to investigate the conduct of charitable corporations, to ensure they are meeting their purposes and obligations.

In the early going, that appears to have led Healey's office to flag potential violations in its 1932 charter, and farther back, its 1871 corporate charter, which said no property owned by the organization, then operating as the Berkshire Athenaeum, could leave Pittsfield.

The museum disagreed, saying from the outset that none of the works were restricted from sale.

Even so, before the state secured the first injunction, concerns over the legal ramifications of the 1871 law caused the museum to pull 19 of the 40 works from auction lists.

But in the end, the museum had an option: adopting the attorney general's recommendation to get court approval to change how it operates.

That is what a "cy pres" action allows.

It was the "fix" always available, it appears, to the museum.

In an interview Friday, McGraw, the board president, declined to say whether seeking that court approval would have been advisable from the start.

"We can't go backward," she said. "Things happen for a reason. We're in a good place right now, and the museum's fate is secured."

Jacoub said that if Healey's office had pressed on, it might have been able to win a further injunction by arguing the museum had failed to petition for a "cy pres" change.

"But then all the trustees would have needed to do was to file such a petition," he said.

"Absent a new law that governs art museums that prohibits the sale of art in violation of museum association guidelines, the attorney general likely decided to cut its losses after weighing the strength of the law," Jacoub said, "and the resources and energy required to continue litigation."

In a letter to the museum's lead lawyer, attorney Courtney Aladro of Healey's nonprofit and public charities divisionsaid it is not the role of her office to substitute its judgment for a nonprofit board, "nor necessarily endorse ... its specific decisions."

That stance allows Healey's office, in this case, not to be seen as backing how the museum went about its planned art sale.

Even so, the office went on record, with Aladro's letter to museum lawyer William F. Lee, that the museum "reasonably concluded that it does not have any alternative sources for the significant infusion of funds it needs in order to continue to fulfill its mission ... ."

On the issue of how much money that requires, the probe that Aladro led came to side with the museum. It did so after looking at earlier estimates, including from a museum consultant, that $25 million, or even less, might be enough to stabilize its finances. The museum says it had run an average annual deficit of $1.1 million over several years.

Aladro's letter explains the state's reasoning for allowing the sale of the two paintings Rockwell gave the museum, despite its finding that donor intent should prevent any such transactions.

The museum cannot raise the amount of money it needs, Aladro said in her letter to Lee, without selling the Rockwell paintings. And if forced to keep them, it would have to sell an even larger number of pieces from the collection.

The SJC case

In its filing to the SJC, the museum needs to show its continued survival is "impossible or impracticable" if it adheres to existing restrictions. That is the standard used in "cy pres" cases. Healey's office says its investigation supported the museum's claim that it faced closing.

Documents pinpoint issues in the case a justice in Boston will soon take up.

While no timetable is set for a decision, the museum is asking the court to advance the case quickly, perhaps in time for spring art sales, to avoid being affected by any slump in the art market.

In its main filing to the SJC, signed under the penalty of perjury, museum officials say the institution got into financial trouble despite "robust fundraising operations" due to shifts in the economic climate in the Berkshires that deprived them of major donors.

With an endowment valued at $6.2 million at the end of 2017, the museum said, it risked closing in the "next several years." Last summer, the estimate was six to eight years.

Further, the filing says that major building needs have gone unaddressed.

The museum asks the court to act quickly because the unidentified buyer's offer is time-limited.

In its original plan, the museum said it sought to raise $50 million through art sales (though auction estimates said the total could be higher). It now seeks to raise $55 million. That is because of higher operational costs and expenses stemming from the delay in the art sales, the museum says, and a "changed" fundraising climate.

For its part, Healey's office secured a promise from the museum to consider the interpretive value of works to be sold, not only their possible sale prices.

The museum must report to Healey's office on the progress of sales and the implementation of its "New Vision" at least 14 days before any of up to three batches of works are sold by Sotheby's, following the initial sale of "Shuffleton's."

While it must be alerted about the number and identities of art works up for sale, the state has no say on what is sold, under the agreement.

Six to 12 months after the museum reaches the $55 million ceiling on sales, it must provide a final report to Healey's office, including on the status of its New Vision project.

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