Taylor failed to review the ownership history of "View of the Asylum of Saint-Remy" (search) before acquiring it more than 40 years ago, the descendants of the late Margarete Mauthner claimed in a lawsuit last July.
The family asked for restitution and the painting, which has been appraised between $10 million and $15 million, contending a sales brochure had warned it was likely confiscated by the Nazis.
A message left Tuesday with Thomas Hamilton, who has represented the plaintiffs, wasn't immediately returned. A message left with Sally Morrison, a publicist who has represented Taylor, also wasn't returned.
In a Feb. 2 order, U.S. District Judge Gary Klausner ruled that a state law only permitted the plaintiffs to sue in the three years after property was taken. Another state law that froze the statute of limitations until the property was located didn't apply, the judge said.
The plaintiffs are Andrew J. Orkin of Canada and three South African residents, F. Mark Orkin, Sarah-Rose Josepha Adler and A. Heinrich Zille.
The federal lawsuit followed one that Taylor filed in May requesting to be declared the rightful owner of the painting, which had hung in the living room of her Bel-Air estate.
In 1963, Taylor's father, Francis Taylor, bought the painting on his daughter's behalf for $257,600 at a Sotheby's auction in London.
Hamilton has acknowledged that although the painting subsequently came under the ownership of art collector Alfred Wolf, the Holocaust Victims Redress Act guarantees that confiscated artwork would be returned to victims of Nazi persecution.
In a statement issued after her lawsuit was filed, Taylor said she hadn't seen information suggesting the painting was in Nazi possession.