CHICAGO - A prominent Chicago art collector who has donated extensively to the Art Institute of Chicago has emerged at the center of a dispute over a $10 million painting by Pablo Picasso that was looted by the Nazis during World War II.

Today, a California Superior Court judge will decide whether Marilynn Alsdorf, who has served as a trustee for the Museum of Contemporary Art, may temporarily keep in her possession Picasso's 1922 oil Femme en blanc (also known as Femme assise), which she purchased in 1975 for $357,000.

Next month, the judge will rule on whether the painting must be returned to California, where the heir of a Jewish woman who owned the work before World War II has filed a lawsuit claiming that the Picasso was stolen from a Paris gallery owner in 1940 and was known to have been looted as early as 1947.

The suit alleges that Alsdorf and the Los Angeles art gallery that has represented her in marketing the Picasso for the past year were involved in settlement talks before abruptly ending them and arranging for the painting to be returned to Chicago from California. This was done, the suit alleges, so that the painting would be not subject to a new law that will take effect in California Wednesday. That law retroactively extends the statue of limitations on claims against museums and galleries over Nazi-looted art and is regarded as the most far-reaching of its kind in the United States.

Alsdorf, through her attorneys, maintains that she and her late husband, James, purchased the work in good faith. Her lawyers question whether the Los Angeles heir, Thomas C. Bennigson, has a tenable claim on the work and say the return of the painting to Chicago last week had nothing to do with the current suit.

Judge David P. Yaffe issued a temporary restraining order last week preventing the Los Angeles gallery from moving the painting out of California, though it was later learned that the piece had arrived in Chicago.

"The painting was moved to Chicago specifically because of this suit," said E. Randol Schoenberg, Bennigson's attorney. The plaintiff's grandmother, Carlota Landsberg, fled Berlin in 1938, storing the Picasso with the Paris art dealer J.K. Thannhauser.

"I was hired the week of Dec. 10 and made arrangements to meet with the lawyer representing the gallery [David Tunkl Fine Art] to look at the painting," added Schoenberg. "The next thing I heard is that the painting was being moved to Chicago."

Alsdorf's attorneys, however, claim they were blind-sided by Schoenberg's court filing.

"At this point we're still attempting to review the allegations," said Richard H. Chapman, one of Alsdorf's attorneys. "Nobody's trying to take the painting anywhere or trying to sell it.

"Mrs. Alsdorf feels that she has not done anything wrong. The [court] documents present a compelling story, and she's interested in resolving it."

After the Nazi ascent in Germany, Carlota Landsberg, who was Jewish, began preparing to leave the country, placing her Picasso with the Parisian art dealer Thannhauser, according to court documents.

"As I remember very clearly, and as I therefore can confirm to you in writing, in 1938 or 1939 you sent your painting by Picasso, of a woman, from the so-called classical period of the artist, to me in my house in Paris," wrote Thannhauser to Lansberg in 1958, after she had settled in the United States and resumed her search for her stolen art.

"At this time, as we were forced to leave our home in Paris in 1939, your Picasso hung in the middle of a small wall. Upon the occupation of Paris in 1940, when we were no longer in Paris and the house was closed, the entire contents of the four-story building - and with it your painting - were stolen."

Thannhauser's files, which are housed by the Silva Casa Foundation in Geneva, include a photograph of the interior of Thannhauser's home showing the painting on the wall. The Casa Foundation also holds a book published in 1927 by Klinkhardt & Biermann containing a photograph of the Picasso and listing its owner as Robert Landsberg, Carlota's husband, who died in 1932.

The questionable provenance of the Picasso did not come into play until last December, when a French art dealer interested in purchasing the painting made an inquiry of the Art Loss Register, a London-based organization that often helps Holocaust survivors and their heirs locate stolen art. After learning that the Picasso had been shipped to Switzerland by Alsdorf's agent, Tunkl, for possible sale, the Art Loss Register located Thannhauser's records at the Silva Casa Foundation, according to a court statement by Sarah Jackson, the historic claims director of the Art Loss Register in London.

Jackson told the French art dealer that she needed to contact the current owner, and Alsdorf informed the Art Loss Register that her late husband had purchased the Picasso from the Stephen Hahn Gallery in New York in 1975.

Jackson subsequently learned that the painting had belonged not to Thannhauser but to Landsberg because files in the Wiedergutmachungsamt (or restitution office) in Berlin indicated that Landsberg had been paid 100,000 marks (about $27,300) by the German government in compensation for the theft of the Picasso.

That payment would not affect the claim, Schoenberg said. The file contained a letter from a German official dated Feb. 22, 1965, asking "that the Picasso be struck out of Thannhauser's compensation claim as it belonged to Carlota Landsberg," said Jackson in her court statement.

"Considerable information was found in the archives in Berlin indicating that Thannhauser's property at 5 Miromesnil, Paris, was removed as part of the Mobel-Aktion," or the systematic removal of Jewish-owned property by Nazi forces.

Bennigson says he is the only surviving heir of his grandmother, who died in 1994 in New York. Bennigson learned about the looted Picasso last summer, after the Art Loss Register informed him that the painting had been located and was being offered for sale by the David Tunkl Fine Art gallery on Melrose Place in Los Angeles.

"This was the first time that I, or any member of [my] family, had learned of the location of the painting since 1939," said Bennigson, a law student at the University of California at Berkeley, in a court statement.

Bennigson retained Schoenberg to represent him this month. Neither Tunkl nor his attorney was available for comment.

The lawsuit contends that Alsdorf's representatives recently broke off settlement negotiations that were under way with the Art Loss Register, but Alsdorf's attorney dismissed the relevance of any such talks.

Howard Reich writes for the Chicago Tribune.