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Supreme Court of the United States
MARTIN GROSZ AND LILIAN GROSZ, Petitioners, v. THE MUSEUM OF MODERN ART, Respondent. ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF A PPEALS FOR THE SECOND CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
RAYMOND J. DOWD Counsel of Record LUKE MCGRATH DUNNINGTON BARTHOLOW & MILLER LLP 1359 Broadway, Suite 600 New York, NY 10018 (212) 682-8811 email@example.com ROBERT PFEFFER 3225 Turtle Creek Boulevard Dallas, TX 75219 Attorneys for Petitioners
(800) 274-3321 • (800) 359-6859
i QUESTIONS PRESENTED By summary order, the Second Circuit afﬁ rmed a district court’s dismissal pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure of a complaint alleging timely claims that artworks held by the Museum of Modern Art were stolen in Nazi-era Germany. In so doing, the Second Circuit sanctioned a departure from the traditional role of U.S. courts as a post-War means of redress for victims of theft of readily identiﬁable property during wartime—particularly to undo Nazi-era theft and duress transactions. Because the issue of access by victims of the Nazis to federal courts for restitutionary remedies for stolen property has received disparate treatment by the various circuits, the Second Circuit’s decision raises exceptionally important issues requiring resolution by this Court. Two questions are presented: 1. On a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, may a federal court rely on materials extrinsic to a complaint to decide disputed factual issues governing the accrual of statutes of limitations, where this court in Republic of Austria v. Altmann, 541 U.S. 677 (2004) applied a different standard to a foreign museum? 2. Where the Executive and Congress have adopted a remedial scheme that relies on traditional legal and equitable remedies to return art stolen during the Nazi era to its true owners and where a state statute of limitations requires actual notice to trigger accrual, does a federal court impermissibly frustrate the Executive’s foreign affairs powers by adopting a doctrine of constructive notice where that doctrine will cause a forfeiture of rights to stolen artworks?
ii TABLE OF CONTENTS Page QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . TABLE OF CITED AUTHORITIES . . . . . . . . . . . OPINIONS BELOW. . . . . . . . . . . . . . . . . . . . . . . . . . STATEMENT OF JURISDICTION . . . . . . . . . . . . STATEMENT OF THE CASE . . . . . . . . . . . . . . . . REASONS FOR GRANTING THE PETITION. . I. R E V I E W I S WA R R A N T E D T O CONSIDER THE CONFLICT BETWEEN THE RELIANCE OF U.S. FOREIGN A ND DOMESTIC POLICY ON U.S. COURTS TO RESTITUTE STOLEN PROPERTY AND THE COLLECTIVE UN W ILLINGNESS OF FEDER A L COURTS TO PERMIT CLAIMANTS ACCESS TO THE FEDERAL COURTS ...................................... A. The Issue Of Access To Traditional Restitutionary Remedies Is Implicated In Von Saher, Now Pending On Certiorari To The Ninth Circuit. . . . . . . . . . . . . . . i ii viii x 1 1 1 6
iii Table of Contents Page B. U.S. Foreign And Domestic Policy Chose The Federal Judiciary As The Vehicle For Supplying Restitutionary Remedies In Federal Courts For Na z i T hef t A nd D u ress W here Jurisdictionally Appropriate, And The Federal Judiciary Accepted And Has Traditionally Exercised That Role . . . . 1. U.S. Foreign Policy Consistently Opposed Na z i-Era P roper ty Crimes . . . . . . . . . . . . . . . . . . . . . . . .
2. Post-War Property Recovery Efforts And The Role Of The U.S. Courts . . . . . . . . . . . . . . . . . . . . . . . . C. Congress Enacted The Holocaust Victims Redress Act of 1998 Based On The Presumption That The Judicial Branch Would Continue To Provide Adequate Restitutionary Remedies Grounded In State Law For HolocaustEra Claimants Of Stolen Art. . . . . . . . . 1. Executive Action To Provide Redress For Victims Of Nazi Property Crimes . . . . . . . . . . . . . . .
iv Table of Contents Page 2. Congressional Understanding That State Law-Based Remedies Would Provide Adequate Relief For Nazi Crime Victims . . . . . . . . . D. Federal Courts Have Established Post-1998 A Variety of Measures To Effectively Deny Remedies To Holocaust-Era Claimants. . . . . . . . . . . . 1. I n Vo n S a h e r, T h e N i n t h Circuit Construed California’s Statute Of Limitations To Deny Remedies To The Very Persons That The Legislature Sought t o A s s i st : V ic t i m s O f Na z i War Crimes. . . . . . . . . . . . . . . . . . . .
2. Ju d i c i a l Fe d e r a l i z a t i o n O f Constructive Notice Doctrines Inhibits Both The Broad Role Of Congress In Shaping Foreign Policy Objectives And The More Speciﬁc Power Of The Executive To Reﬁne The Foreign Policy Of The Nation And To Take Care That It Be Faithfully Executed . . . . . . . .
v Table of Contents Page E. The Second Ci rcu it ’s Denia l Of Access To The Courts Based On An Implied Refusal And Equivocation Nullif ies New York’s Statute Of Limitations Rules Protecting True Owners Of Stolen Art. . . . . . . . . . . . . . . 1. Because An Actual Refusal Gives A True Owner Fair Notice Of The Need To Protect Property Rights, The Second Circuit’s Endorsement Of An Implied Refusal Rule Defeats An Important Protection Under New York Law That Serves To Avoid Forfeitures By True Owners Of Stolen Artworks . . . . . . . . . . . . .
2. New York Retained Its DemandAnd-Refusal Rule At The Behest Of The Federal Government To Effectuate An Important Federal Policy Endorsed By The Executive Branch; The Second Circuit’s Endorsement Of An Implied Refusal Rule Frustrates The Executive’s Policy Against Defeating The Trafﬁcking Of Stolen Art . . . . . . . .
vi Table of Contents Page F. Petitioners Seek Review Of The Second Circuit’s Decision Because It, Like The Ninth Circuit’s Decision In Von Saher, Frustrates A Remedial Plan For NaziEra Crime Victims Consonant With Federal Restitution Policy . . . . . . . . . . .
II. R E V I E W I S WA R R A N T E D T O CONSIDER THE CONFLICT BETWEEN THE DI V ERGENT PROCEDURA L STA NDA RD A PPLIED TO A U. S . MUSEUM BY THE SECOND CIRCUIT ON A RULE 12(b)(6) MOTION WITH THIS COURT’S TREATMENT OF AN AUSTRIAN MUSEUM IN REPUBLIC OF AUSTRIA V. ALTMANN . . . . . . . . . . . . A. In Altmann, This Court Assumed The Truth Of Allegations Of Nazi Art Looting, Possession And Concealment Against An Austrian Museum And Should Requi re That The Same Standard Be Applied To A U.S. Museum . . . . . . . . . . . . . . . . . . . . . . . . . . B. The Second Circuit’s Sanction Of Use Of Extrinsic Evidence To Dismiss Claims Against A U.S. Museum Frustrates Federal Restitution Policy And Promotes A Procedural Standard That Lacks Uniformity. . . . . . . . . . . . . .
vii Table of Contents Page C. Judicial Nullification Of Common Law Doctrines To Deprive Claimants Of Remedies Poses Par ticularly Important Concerns Warranting This Court’s Exercise Of Its Supervisory Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . III. R E V I E W I S W A R R A N T E D BECAUSE THE SECOND CIRCUIT’S DECI SION, T O GET H ER W I T H O THER DECISIONS DEPRI V ING RESTITUTIONARY REMEDIES, RISK MAKING U.S. MUSEUMS HAVENS FOR STOLEN ART . . . . . . . . . . . . . . . . . . . . CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
viii TABLE OF APPENDICES Page A PPENDIX A — SUMMARY ORDER OF T H E U N I T ED S TAT E S C OU RT OF APPEALS FOR THE SECOND CIRCUIT, FILED DECEMBER 16, 2010 . . . . . . . . . . . . . . . APPENDIX B — DECISION AND ORDER D E N Y I N G P L A I N T I F F S ’ M O T IO N F OR R EC ONSI DER AT ION OF T H E UNITED STATES DISTRICT COURT, S OU T H ER N DI S T R IC T OF N E W YORK, FILED MARCH 3, 2010 . . . . . . . . . . . . . A PPENDI X C — J U DGMEN T OF THE UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK, FILED JANUARY 11, 2010 . . . . . . . . . . . . . . . . . APPENDIX D — DECISION AND ORDER OF THE UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK, FILED JANUARY 6, 2010 . . . . . . . . . . . . . . . . . . A P P E N DI X E — O R D E R D E N Y I N G PETITION FOR REHEARING OF THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, FILED FEBRUARY 9, 2011 . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX F — WASHINGTON PRINCIPLES ON HOLOCAUST-ERA ASSETS, DATED DECEMBER 3, 1998 . . . . . . . . . . . . . . . . . . . . . . .
ix Table of Appendices Page A PPENDIX G — PRAGUE HOLOCAUST ERA ASSETS CONFERENCE: TEREZÍN DECLARATION, DATED JUNE 30, 2009 .......................................... APPENDIX H — THE DEPARTMENT OF STATE BULLETIN, DATED JANUARY 9, 1943 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
x TABLE OF CITED AUTHORITIES Page FEDERAL CASES Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) . . . . . . . . . . . . . . . . . . . . . Ball v. Liney, 48 N.Y. 6 (1871) . . . . . . . . . . . . . . . . . . . . . . . . . . Bakalar v. Vavra, 619 F.3d 136 (2d Cir. 2010) . . . . . . . . . . . . . . . . . Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) . . . . . . . . . . . . . . . . . . . . . . . 25 18 15 25
Bernstein v. N.V. Nederlandsche-Amerikaansche Stoomvaart-Maatschappij, 210 F.2d 375 (2d Cir. 1954) . . . . . . . . . . . . . . . . . 8, 10 Blue Tree Hotels Inv. (Canada) Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212 (2d Cir. 2004) . . . . . . . . . . . . . . . . . Church of the Lukumi Babalu Aye v. City of Hialeah, (91-948), 508 U.S. 520 (1993). . . . . . . . . . . . . . . . . . . . . . . . DeWeerth v. Baldinger, 836 F.2d 103 (2d Cir. 1987) . . . . . . . . . . . . . . . . . Dunbar v. Seger-Thomschitz, 625 F.3d 574 (5th Cir. 2010) . . . . . . . . . . . . . . . . .
8 18 15
xi Cited Authorities Page Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). . . . . . . . . . . . . . . . . . . . . . . . . McEntee v. New Jersey Steamboat Co., 45 N.Y. 34 (1871) . . . . . . . . . . . . . . . . . . . . . . . . . . Medellin v. Texas, 552 U.S. 491 (2007) . . . . . . . . . . . . . . . . . . . . . . . Museum of Fine Arts, Boston v. Seger-Thomschitz, 623 F.3d 1 (1st Cir. 2010) . . . . . . . . . . . . . . . . . . . 17 19 23
Orkin v. Taylor, 487 F.3d 734 (9th Cir. 2007) . . . . . . . . . . . . . . passim Republic of Austria v. Altmann, 541 U.S. 677 (2004) . . . . . . . . . . . . . . . . . . . 24, 25, 26 Saltus & Saltus v. Everett, 20 Wend 267 (1838) . . . . . . . . . . . . . . . . . . . . . . . Schoeps v. Museum of Modern Art, 594 F. Supp. 2d 461 (S.D.N.Y. 2009) . . . . . . . . . . Schwartz v. Cincinnati Museum Association, 35 Fed. Appx. 128, 2002 WL 554492 (6th Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 15
Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311 (1991) . . . . . . . . . . . . . . . . . . . . . . 18, 20
xii Cited Authorities Page The Detroit Institute of Arts v. Ullin, 2007 WL 1016996 (E.D. Mich. 2007) . . . . . . . . 14, 16 Toledo Museum of Art v. Ullin, 477 F. Supp. 2d 802 (N.D. Ohio 2006). . . . . . 14, 15, 16 Vineberg v. Bissonnette, 548 F.3d 50 (1st Cir. 2008). . . . . . . . . . . . . . . . . . 15
Von Saher v. Norton Simon Museum of Art, 131 S. Ct. 379 (Oct. 4, 2010) . . . . . . . . . . . . . . . 6, 7, 14 Von Saher v. Norton Simon Museum of Art, 592 F.3d 954 (9th Cir. 2009) . . . . . . . . . . . . . . . . 7
Von Saher v. Norton Simon Museum of Art at Pasadena, 578 F.3d 1016 (9th Cir. 2009) . . . . . . . . . . . . . . passim FEDERAL STATUTES 28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . . 28 U.S.C. § 1332(a)(2) . . . . . . . . . . . . . . . . . . . . . . . FEDERAL RULES S. Ct. Rule 10(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 1 2
Fed. R. Civ. P. 12(b)(6) . . . . . . . . . . . . . . . . . . . . . passim
xiii Cited Authorities Page Fed. R. Civ. P. 12(d) . . . . . . . . . . . . . . . . . . . . . . . . . Fed. R. Civ. P. 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 26
Fed. R. Evid. 408 . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 28 TREATIES AND INTERNATIONAL ACCORDS Washington Conference Principles on NaziConﬁscated Art (December 3, 1998). . . . . . . 11, 27, 28 Terezín Declaration (June 30, 2009). . . . . . . . . . . . The London Declaration (January 5, 1943) . . . . . . MISCELLANEOUS “3 U.S. Agencies Urge Veto of Art-Claim Bill,” NY Times (July 23, 1986) . . . . . . . . . . . . . . . . . . . . Eizenstat, Stuart E., Imperfect Justice: Looted Assets, Slave Labor, and the Unfinished Business of World War II (PublicAffairs, January 7, 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . Graefe, Emily, The Conf licting Obligations of Museums Possessing Nazi-Looted Art, 51 B.C. L. Rev. 473 (March 2010) . . . . . . . . . . . . . Gressman, Eugene et al ., Supreme Cour t Practice, § 4.15 (Ninth Ed. 2007) . . . . . . . . . . . . . 20 11 9
xiv Cited Authorities Page Hall, Ardelia R., The Recovery of Cultural Objects Dispersed During World War II, 25 Dept. St. Bull. 337 (1951) . . . . . . . . . . . . . . . .
Kreder, J., Guarding the Historical Record From the Nazi-Era Art Litigation Tumbling Toward the Supreme Court, U. Pa. L. Rev. PENNumbra 253 (2011) . . . . . . . . . . . . . . . . . . . . 13, 16 Kreder, J., The New Battleground of Museum Ethics and Holocaust-Era Claims: Technicalities Trumping Justice or Responsible Stewardship of the Public Trust?, 88 Or. L. Rev. 37, 59-75 (2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tate, Jack B., Jurisdiction of U.S. Courts Re Suits for Identifiable Property Involved In Nazi Forced Transfers, 20 Dep’t State Bull. 592 (1949). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Testimony of American Association of Museum Directors President James Cuno to Congress, (July 27, 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 OPINIONS BELOW The opinion of the United States Court of Appeals for the Second Circuit is reported at Grosz v. Museum of Modern Art, 403 Fed. Appx. 575 (2d Cir. 2010). The Second Circuit afﬁ rmed the January 6, 2010 decision of the United States District Court for the Southern District of New York, reported at 2010 WL 88003 (S.D.N.Y. Jan. 6, 2010). Judgment was entered on January 11, 2010. The United States District Court for the Southern District of New York denied reconsideration by decision dated March 3, 2010. Pet. App. 1a-66a. STATEMENT OF JURISDICTION This Court’s jurisdiction is invoked under 28 U.S.C. § 1254(1). The Second Circuit’s opinion was rendered December 16, 2010. Petitioners sought rehearing on December 29, 2010. The Second Circuit denied the Petition for Rehearing or Rehearing En Banc on February 9, 2011. Pet. App. 67a-68a. STATEMENT OF THE CASE Petitioners seek a review of a decision of the Second Circuit that permitted the Museum of Modern Art to invoke a statute of limitations defense. Petitioners ﬁ led a complaint alleging conversion and seeking replevin of three paintings by the artist George Grosz (“Paintings”) currently located at the Museum of Modern Art (“MoMA”) in New York and claimed by Petitioners, the undisputed heirs of George Grosz (“Grosz”). Petitioner Lilian Grosz
2 is a New Jersey resident, and Petitioner Martin Grosz is a Pennsylvania resident. The value of the Paintings exceeds $75,000 and MoMA is located in New York, so the district court had diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(2). Grosz was a world-renowned German artist who ﬂed Nazi persecution in 1933. Grosz left his artworks in his Berlin studio and in the care of his Jewish art dealer, Alfred Flechtheim, a Nazi persecutee who also ﬂed Nazi Germany in 1933. The Paintings were lost during this ﬂ ight due to Nazi persecution. In 1937, Flechtheim died in London. After ﬂeeing Hitler, Grosz landed in 1933 in New York City, where he raised his family through the end of World War II. After the war, Grosz and his family ﬁ led claims against Germany for all artworks lost by Grosz. By the time Germany determined the works to be lost due to Nazi persecution, Grosz was dead. In 1994, the Grosz family retained art historian Ralph Jentsch to trace artworks stolen from Grosz. After a decade-long search, in 2003, Jentsch discovered documents revealing how the Paintings were stolen from Flechtheim and Grosz. Jentsch promptly wrote to MoMA demanding the Paintings’ return. Following the demand, the Grosz Heirs and MoMA agreed that MoMA would hold the Paintings and work with Jentsch to investigate the title of the Paintings. From 2003 through 2006, the parties shared research and engaged in extensive settlement communications.
3 During settlement negotiations, in response to Jentsch’s expressed concerns that MoMA had refused the Grosz Heirs’ claims, MoMA Director Glenn Lowry repeatedly denied that he had refused the claims and reassured Jentsch that he had no power to make any refusal, writing on January 18, 2006, “As I have told you many times … any decision on a matter like this must be considered by the Museum’s Trustees.” 2d. Cir. App., Vol. I, A-323. Throughout that period, Lowry repeatedly asserted that only the Board of Trustees had the power to refuse the Grosz heirs’ claims to the Paintings. 2d. Cir. App., Vol. I, A-191, A-323. On April 11, 2006, MoMA’s Board of Trustees voted to refuse to return the Paintings. 2d. Cir. App., Vol. II, A-326-335. On April 12, 2006, MoMA sent a notice of the refusal to the Grosz Heirs. 2d. Cir. App., Vol. I, A-186. Prior to that notice, no representative of MoMA told Jentsch or any of the Plaintiffs that the museum’s trustees had decided to reject Plaintiffs’ claims. MoMA’s Associate General Counsel Henry Lanman reiterated the April 12, 2006 refusal date in a letter on June 26, 2008 to Plaintiffs’ counsel David Rowland: “At the conclusion of his investigation, Mr. Katzenbach recommended to the Museum’s Board of Trustees that it reject your clients’ claims, a decision that was communicated to your clients on April 12, 2006.” 2d. Cir. App., Vol. II, A-540. On April 10, 2009, the Grosz Heirs ﬁ led this action alleging a claim for conversion, replevin, and to impress a constructive trust based on MoMA’s April 12, 2006 refusal to return the Paintings. The complaint was commenced
4 within three years of the April 12, 2006 refusal date stated in the aforementioned letters and the Complaint. MoMA moved to dismiss the action as time-barred. MoMA appended settlement communications to the motion papers, including a letter dated July 20, 2005 from Lowry offering to share ownership of the Paintings—a letter that was not referred to nor relied on in the Complaint. 2d. Cir. App., Vol. I, A-187. The Petitioners objected to consideration of extrinsic evidence. The district court denied the arguments on statute of limitations grounds. The district court issued a decision and order dated January 6, 2010. Pet. App. 33a-36a. The district court determined that MoMA’s retention of the Paintings following Petitioners’ original demand letter in November 2003 was an implicit “refusal” triggering a three-year statute of limitations under New York’s demand-andrefusal rule as a matter of law. The district court stated of the July 20, 2005 Lowry letter offering to share ownership of the Paintings that “Lowry’s temporizing language was almost certainly designed to entice plaintiffs to continue negotiating and to prevent the dispute from becoming public or escalating into litigation.” Pet. App., 58a-59a. However, the district court also found the offer to share ownership in that letter also to be a “refusal” triggering New York’s three-year statute of limitations for conversion as of July 20, 2005. Pet. App., 54a, 56a. Finding the three-year statute of limitations to have expired prior to Petitioners ﬁ ling this action on April 10, 2009, the district court dismissed the complaint and denied leave to amend. Petitioners appealed, contesting the District Court’s application of New York’s demand-and-refusal rule on these grounds: (i) since Petitioners had consented to
5 MoMA’s possession of the Paintings pending the outcome of the investigation, no conversion occurred and thus the statute of limitations was not triggered prior to April 12, 2006; (ii) Rule 408 of the Federal Rules of Evidence and Rule 12(b)(6) of the Federal Rules of Civil Procedure forbid consideration of extrinsic evidence on a motion to dismiss, particularly an inadmissible offer to compromise; (iii) the July 20, 2005 Lowry letter was not a refusal and could not reasonably be construed as such under New York law; (iv) Lowry had no actual or apparent authority to make a refusal as required by New York law; (v) even if a refusal had occurred, New York law entitled Petitioners to equitable estoppel based on Lowry’s temporizing behavior and MoMA Assistant General Counsel Lanman’s later representation that MoMA had refused Petitioners’ demand on April 12, 2006; and (vi) the complaint alleged timely claims of unjust enrichment and constructive trust. On December 16, 2010, the Second Circuit summarily afﬁ rmed the district court’s decision dismissing without leave to replead.
6 REASONS FOR GRANTING THE PETITION I. REVIEW IS WARRANTED TO CONSIDER THE CONFLICT BETWEEN THE RELIANCE OF U.S. FOREIGN AND DOMESTIC POLICY ON U.S. COURTS TO RESTITUTE STOLEN PROPERTY AND THE COLLECTIVE UNWILLINGNESS OF FEDERAL COURTS TO PERMIT CLAIMANTS ACCESS TO THE FEDERAL COURTS
In addressing unﬁnished business of World War II, both Congress and the Executive relied on federal courts as a forum to unwind transactions resulting from Nazi persecution. In 1998, Congress relied on pre-existing state law remedies and access to the courts in crafting solutions for true owners to recover Nazi-era stolen artworks. After 1998 however, a wave of federal judicial decisions developed constructive notice doctrines that effectively denied Holocaust-era property claimants the opportunity to reclaim stolen property. In Von Saher v. Norton Simon Museum of Art, No. 091254, 131 S. Ct. 379 (Oct. 4, 2010), a petition for certiorari currently pending, this Court solicited the views of the Solicitor General on the judicial invalidation of a State’s attempt to provide remedies to claimants seeking to recover art stolen in the Nazi-era. This Petition presents for review the same central questions: the degree to which federal courts may deprive claimants to artworks stolen during the Nazi era of traditional common law remedies and the extent to which such denial inhibits the Executive’s power to set foreign policy and the remedial scheme envisioned by Congress.
7 A. T h e I s s u e O f A c c e s s To T r a d i t io n a l Restitutionary Remedies Is Implicated In Von Saher, Now Pending On Certiorari To The Ninth Circuit.
In Von Saher, supra, 131 S.Ct. 379, this Court sought the views of the Solicitor General in a petition for certiorari challenging a decision of the Ninth Circuit holding unconstitutional California’s extension of a statute of limitations for Holocaust victims to recover Nazi-looted artworks from California museums. See 131 S.Ct. 379; Petition for Writ of Certiorari, 2010 WL 1557533, at *3, *7. Reviewing the efforts of recent Administrations to remedy the problem of recovering stolen art from museums, the Ninth Circuit noted that the history of federal action is so comprehensive and pervasive as to leave no room for state legislation. Von Saher v. Norton Simon Museum of Art at Pasadena, 578 F.3d 1016, 1029 (9th Cir. 2009) modiﬁed en banc at 592 F.3d 954. Although the Ninth Circuit’s en banc panel afﬁ rmed the decision on other grounds, the original panel in Von Saher pointed out a central truth: that federal action in the area of providing relief to claimants of artworks stolen during the Holocaust is pervasive and that whether and if remedies are available to claimants is essentially a question that by tradition has been dictated by the foreign policy of the federal government. Accordingly, this Petition seeking review of the Second Circuit’s denial of traditional state remedies implicates the same important question of U.S. foreign policy in favor of providing restitutionary remedies to victims of Nazi art theft raised in the Von Saher petition.
8 B. U.S. Foreign And Domestic Policy Chose The Federal Judiciary As The Vehicle For Supplying Restitutionary Remedies In Federal Courts For Nazi Theft And Duress Where Jurisdictionally Appropriate, And The Federal Judiciary Accepted And Has Traditionally Exercised That Role In 1954, at the behest of the U.S. State Department, the Second Circuit reversed its earlier decision declining to review Nazi depredations under the act of state doctrine, and it decided that the U.S. District Court for the Southern District of New York would provide a forum for redress of Nazi property crimes against its victims. Bernstein v. N.V. Nederlandsche-Amerikaansche Stoomvaart-Maatschappij, 210 F.2d 375, 376 (2d Cir. 1954) (quoting Jack B. Tate). Ever since, the federal courts have played this valuable role and have been relied upon by the Executive to do so. 1. U.S. Foreign Policy Consistently Opposed Nazi-Era Property Crimes
Outrageous acts of persecution and spoliation are well known and were reported regularly on the front pages of the New York Times. Church of the Lukumi Babalu Aye v. City of Hialeah (91-948), 508 U.S. 520 (1993). The London Declaration of January 5, 1943, signed by the United States and seventeen other nations, served as a “formal warning to all concerned, and in particular persons in neutral countries,” that the Allies intended “to do their utmost to defeat the methods of dispossession practiced by the governments with which they [were] at war….” Pet. App., 89a-90a; Von Saher, 578 F.3d 1016, 1023 (9th Cir. 2009).
9 After the Allied victory over the Third Reich in 1945, the United States reafﬁ rmed the commitment of the 1943 London Declaration by requiring European nations to repudiate all purported transactions in art stolen by the Nazis between 1933 and 1945 and to draft laws mandating return of all property stolen from Nazi persecutees. After the Allies withdrew from Europe in the 1950’s at the start of the Cold War, Western Europe largely ignored those commitments to assist the return of hundreds of thousands of stolen artworks to the rightful, legal owners. 2. Post-War Property Recovery Efforts And The Role Of The U.S. Courts
The U.S. worked diligently to restore stolen artworks to their true owners for years thereafter. In 1951, a U.S. State Department bulletin proclaimed: “For the ﬁ rst time in history, restitution may be expected to continue for as long as works of art known to have been plundered during a war continue to be rediscovered.” Hall, Ardelia R., The Recovery of Cultural Objects Dispersed During World War II, 25 Dept. St. Bull. 337, 339 (1951). In 1954, once the State Department made clear that federal courts should provide a forum for restitution of property stolen or obtained by Nazi duress, the Second Circuit stripped Nazi Germany of sovereign immunity. In so doing, the court cited a crucial letter of the Legal Adviser: This Government has consistently opposed the forcible acts of dispossession of a discriminatory and confiscatory nature practiced by the Germans on the countries or people subject to their controls…. The policy of the Executive, with respect to claims asserted in the United States for the restitution of identiﬁable property
10 (or compensation in lieu thereof) lost through force, coercion, or duress as a result of Nazi persecution in Germany, is to relieve American courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi ofﬁcials. Bernstein, 210 F.2d 375, 376 (quoting Jack B. Tate); Jurisdiction of U.S. Courts Re Suits for Identiﬁ able Property Involved In Nazi Forced Transfers, 20 Dep’t State Bull. 592, 592-93 (1949). During this period, in accord with the doctrine of separation of powers, the judiciary deferred to the role of the Executive in articulating the role that courts should play by providing traditional common law remedies to victims of Nazi depredations. C. Congress Enacted The Holocaust Victims Redress Act of 1998 Based On The Presumption That The Judicial Branch Would Continue To Provide Adequate Restitutionary Remedies Grounded In State Law For Holocaust-Era Claimants Of Stolen Art
Following the collapse of the Soviet Union, the Executive branch renewed its efforts to provide remedies worldwide for victims of Nazi property crimes. Congress followed suit, passing legislation to promote uncovering crimes and to ensure that stolen property would be returned. In doing so, the Executive and Congress relied on the Judiciary to continue to play its role in effectuating state-law based restitutionary remedies.
11 1. Executive Action To Provide Redress For Victims Of Nazi Property Crimes
Consistent with its restitution policy, the United States spearheaded efforts to reclaim Nazi-looted artwork and obtained new commitments from nations, including nations of the former Soviet Union, to facilitate restitution to the true, legal owners of stolen property pursuant to merits-based determinations of ownership. The United States’ efforts are embodied in the Washington Conference Principles on Nazi-Conﬁscated Art (Dec. 3, 1998) (Pet. App. 69a-71a) and the declaration of fortysix nations that adopted the Terezin Declaration (30 June 2009) (Pet. App. 72a-88a). Respondent Museum of Modern Art participated in and supported the Washington Principles, which affirmatively welcome potential claimants to come forward. To honor obligations under the Washington Principles, numerous countries set up restitution commissions. 2. Congressional Understanding That State Law-Based Remedies Would Provide Adequate Relief For Nazi Crime Victims
In 1998 Congress passed the Holocaust Victims Redress Act (the “HVRA”). In doing so, it solicited testimony of U.S. museums: “ W hen public awareness of Nazi-Looted art increased during the 1990’s Congress considered enacting legislation to set standards for returning stolen art. Museum directors, however, testiﬁed that they could better handle the subject themselves, resulting in codes
12 of ethics promulgated by [the Association of American Museum Directors and American Association of Museums]....” Graefe, Emily, The Conﬂicting Obligations of Museums Possessing Nazi-Looted Art, 51 B.C. L. Rev. 473 (March 2010). In enacting the HVRA, Congress concluded that no federal remedy was necessary to effectuate restitution of stolen art in the United States because pre-existing state law remedies sufﬁced. Orkin v. Taylor, 487 F.3d 734, 739 -741 (9th Cir. 2007) (holding that because Congress believed that state law provided pre-existing adequate remedies, the HVRA did not imply a federal remedy). As the Ninth Circuit observed: [T]he legislative intent was to encourage state and foreign governments to enforce existing rights for the protection of Holocaust victims. The sponsor and primary champion of the legislation, Representative Jim Leach (R-IA), believed that existing law would suffice to restitute Nazi-stolen artworks to their Naziera owners. *** Finally, …. there can be no doubt—as this case amply demonstrates—that state law provides causes of action for restitution of stolen artworks. … Holocaust Victims’ Claims, Hearing before the House Committee on Banking and Financial Services, 105th Cong., 2d Sess. (1998).
13 Orkin, 4 87 F. 3d at 739 -741 (emphasis supplied). Accordingly, the current legal scheme initiated by the Executive and relied upon by Congress is for the federal judiciary to diligently enforce the restoration of stolen artworks to the true owners using the traditional common law and equitable remedies available in state law. D. Federal Courts Have Established Post-1998 A Variety of Measures To Effectively Deny Remedies To Holocaust-Era Claimants
A fter Cong ress acted in 1998, federal courts nationwide have adopted constructive notice doctrines having the effect of frustrating the workings of traditional common law restitutionary remedies and denying redress to claimants of artworks stolen in the Nazi era. See, Kreder, J., Guarding the Historical Record From the Nazi-era Art Litigation Tumbling Toward the Supreme Court, 159 U. Pa. L. Rev. PENNumbra 253 (2011). This nulliﬁcation of the common law and principles of equity has taken several forms. 1. In Von Saher, The Ninth Circuit Construed California’s Statute of Limitations To Deny Remedies To The Very Persons That The Legislature Sought to Assist: Victims Of Nazi War Crimes
California’s statutes of limitations have been interpreted in such a way as to deny claimants of Nazi-era looted artworks relief. When the California legislature tried to restore the status quo ante and to extend the statute of limitations to afford claimants relief, the Ninth Circuit struck the statute down as unconstitutional. In
14 doing so, the Ninth Circuit has directly challenged the remedial scheme envisioned by Congress in enacting the HVRA. A petition for certiorari is pending, and this Court has solicited and is awaiting the Solicitor General’s views. Von Saher, 1315 S.Ct. 379 (2010). 2. Judicial Federalization Of Constructive Notice Doctrines Inhibits Both The Broad Role Of Congress In Shaping Foreign Policy Objectives And The More Speciﬁc Power Of The Executive To Reﬁne The Foreign Policy Of The Nation And To Take Care That It Be Faithfully Executed
In 1998, Congress was correct in believing that the common law provides remedies for restitution of stolen property, since traditional common law would give claimants a jury trial on whether they had notice or should reasonably have discovered the whereabouts of Nazilooted artworks.1 After the adoption of the Washington Principles, however, museums suing Holocaust victims persuaded the courts to dismiss ownership claims pursuant to Rule 12(b)(6) by imputing to the victims constructive notice of Nazi-era transactions. See, e.g., Toledo Museum of Art v. Ullin, 477 F.Supp.2d 802; The Detroit Institute of Arts v. Ullin, 2007 WL 1016996; Orkin, 487 F.3d at 739 -741. To be sure, not all federal courts have been hostile to
1. In jurisdictions that follow the discovery rule for accrual of statute of limitations of conversion claims, both actual and constructive notice are factual questions, determined by a jury. Schwartz v. Cincinnati Museum Association, 35 Fed. Appx. 128, 131, 2002 WL 554492 at *4 (6th Cir. 2002)(Ohio law); Museum of Fine Arts, Boston v. Seger-Thomschitz, 623 F.3d at 9 (Massachusetts law).
15 claimants alleging Nazi theft or duress. See, e.g., Bakalar v. Vavra, 619 F.3d 136 (2d Cir. 2010) (vacating trial court’s dismissal under Swiss law and remanding for ﬁ ndings under New York law); Vineberg v. Bissonnette, 548 F.3d 50 (1st Cir. 2008)(granting summary judgment on Nazi duress sale); Schoeps v. Museum of Modern Art, 594 F.Supp.2d 461 (S.D.N.Y. 2009)(denying museum’s motion for summary judgment and ﬁnding genuine issue of fact as to whether museum had unclean hands due to knowledge of misappropriation). It is fair, however, to note the growing tendency among federal judges to impute knowledge of Nazi era transactions to persecuted victims and to observe that this tendency is itself contrary to the common law principle that such questions are reserved for the jury and must be pleaded and proven. Some federal judges have overlooked the dictates of the common law—with the Fifth Circuit notably permitting Louisiana law to launder title to stolen art. 2 In one example of a federal court using constructive notice to trigger a statute of limitations, Toledo Museum of Art v. Ullin, the district court, in considering a museum’s quiet title action against heirs of a Jewish Nazi persecutee, dismissed the heirs’ counterclaims pursuant to Rule 12(b) (6) of the Federal Rules of Civil Procedure, even though the court acknowledged that the defendants disputed
2. The Fifth Circuit has permitted Louisiana’s prescriptive laws to launder title to allegedly stolen property located in Louisiana. Louisiana grants title to a holder of stolen property after ten years of possession under the doctrine of acquisitive prescription. Dunbar v. Seger-Thomschitz, 615 F.3d 574 (5th Cir. 2010) cert. den. 131 S. Ct. 1511 (Feb. 22, 2011).
16 the existence of a sale or that they had knowledge of the artwork’s location and provenance. The district court imputed an earlier constructive notice date because the Toledo Museum’s possession of the artwork was “easily discoverable”. 477 F.Supp.2d at 806 n. 1-808. In an even more problematic instance, in The Detroit Institute of Arts v. Ullin, a carbon copy of the Toledo case brought against the same heirs on the same day in retaliation for coming forward under the Washington Principles, the district court determined that the discovery rule did not apply since it was a “commercial conversion” case, so Michigan’s statute of limitations started running in 1938, the time of the alleged forced transaction. 2007 WL 1016996 at *3. As Professor Kreder observes, “A consequence of the suit is that the painting remains on display as if Ms. Nathan had been perfectly free to engage in fair commercial transactions while on the run from a genocidal regime.” Kreder, J., Guarding the Historical Record at 261. In an additional example of courts adopting problematic constructive notice doctrines, the Ninth Circuit, in afﬁ rming a dismissal pursuant to Rule 12(b)(6) a claim based on a coerced sale by Jewish heirs to a painting in California, the Ninth Circuit observed: “Had the Orkins investigated any of those publicly-available sources, they could have discovered both their claim to the painting and the painting’s whereabouts long before the 2002 internet rumor was posted.” Orkin, 487 F.3d at 738. In sum, the trend of federal courts’ constructive notice doctrines nullifying traditional common law restitutionary remedies contrary to the expectations of the Executive
17 and Congress is widespread, creating an urgent national need for this Court to exercise its supervisory powers to restore proper restraint and respect for traditional common law and equity. Erie R. Co. v. Tompkins, 304 U.S. 64 (1938). E. The Second Circuit’s Denial Of Access To The Courts Based On An Implied Refusal And Equivocation Nulliﬁes New York’s Statute Of Limitations Rules Protecting True Owners Of Stolen Art The Second Circuit’s decision warrants review by this Court because it has nulliﬁed an important protection of true owners of stolen property that is well-grounded in New York law and that was retained at the request of the federal government as a measure to combat the trafﬁc in stolen art. By afﬁ rming the district court’s decision nullifying this protection, the Second Circuit has thus defeated an important federal policy of encouraging states to adopt rules that will protect interstate commerce from trafﬁc in stolen property. The Second Circuit’s decision further warrants review because it fairly presents an example of the post-1998 judicially-crafted constructive notice doctrines denying access to the courts, and thus presents important national and international issues conﬂ icting with federal policy that this Court should address. See Kreder, J., The New Battleground of Museum Ethics and Holocaust-Era Claims: Technicalities Trumping Justice or Responsible Stewardship of the Public Trust?, 88 Or. L. Rev. 37, 59-75 (2009).
18 1. Because An Actual Refusal Gives A True Owner Fair Notice Of The Need To Protect Property Rights, The Second Circuit’s Endorsement Of An Implied Refusal Rule Defeats An Important Protection Under New York Law That Serves To Avoid Forfeitures By True Owners Of Stolen Artworks
New York case law has long protected the right of the owner whose property has been stolen to recover that property, even if it is in the possession of a good-faith purchaser for value. Solomon R. Guggenheim Found. v. Lubell, 77 N.Y.2d 311, 317-18, 569 N.E.2d 426, 567 N.Y.S.2d 623 (1991) citing Saltus & Saltus v Everett, 20 Wend 267, 282 (1838). New York courts have explicitly chosen and endorsed the demand-and-refusal statute of limitations rule because it is the most protective of true owners of stolen art. Guggenheim at 317-318. 3 Under New York law, a cause of action for replevin against the good-faith purchaser of a stolen chattel accrues when the true owner makes demand for return of the chattel and the person in possession of the chattel refuses to return it. Id. at 317318. Until demand is made and refused, possession of the stolen property by the good-faith purchaser for value is not considered wrongful. Id. at 318. A refusal must be unqualiﬁed to constitute a refusal under New York’s demand-and-refusal rule. Ball v. Liney, 48 N.Y. 6, 12 (1871) (only an unqualiﬁed refusal to
3. In Guggenheim, the New York Court of Appeals explicitly criticized the Second Circuit for incorrectly grafting a due diligence requirement on true owners of stolen art. Guggenheim at 318-319 criticizing DeWeerth v. Baldinger, 836 F.2d 103 (2d Cir. 1987) cert denied 486 U.S. 1056 (1928).
19 return Plaintiffs’ property would constitute a conversion); McEntee v. New Jersey Steamboat Co., 45 N.Y. 34 (1871) (refusal to deliver goods to a person entitled to receive them constitutes a conversion unless the refusal is qualiﬁed). The reason that New York requires an actual, unequivocal and unqualiﬁed refusal is to protect a true owner of property from the risk of forfeiture in any ambiguous situations. Under New York law, where a situation is unclear, the true owner of property is not at risk. Critically, the Second Circuit’s decision endorses an implied refusal rule that ﬂ ips this presumption and shifts the risk of loss during lengthy negotiations to true owners of stolen property, rather than, as New York requires, to the possessor. The Second Circuit’s nulliﬁcation of this important protection for true owners of stolen property frustrates important federal interests and implicates important federal policies relating to the administration of justice in protecting good faith settlement negotiations as a means of fostering dispute resolution. 2. New York Retained Its Demand-AndRefusal Rule At The Behest Of The Federal Government To Effectuate An Important Federal Policy Endorsed By The Executive Branch; The Second Circuit’s Endorsement Of An Implied Refusal Rule Frustrates The Executive’s Policy Against Defeating The Trafﬁcking Of Stolen Art
New York’s demand-and-refusal rule was preserved in part at the request of the federal government to carry out the important federal policy of ﬁghting the trafﬁc in
20 stolen art. New York rejected less protective measures at the behest of the U.S. State Department, the U.S. Department of Justice, and the U.S. Information Agency: Governor Cuomo vetoed the measure … on advice of the United States Department of State, the United States Department of Justice and the United States Information Agency (see, 3 U.S. Agencies Urge Veto of Art-Claim Bill, NY Times, July 23, 1986, at C15, col 1). In his veto message, the Governor expressed his concern that the statute “[did] not provide a reasonable opportunity for individuals or foreign governments to receive notice of a museum’s acquisition and take action to recover it before their rights are extinguished.” The Governor also stated that he had been advised by the State Department that the bill, if it went into effect, would have caused New York to become “a haven for cultural property stolen abroad since such objects [would] be immune from recovery under the limited time periods established by the bill.” The history of this bill and the concerns expressed by the Governor in vetoing it, when considered together with the abundant case law spelling out the demand and refusal rule, convince us that that rule remains the law in New York and that there is no reason to obscure its straightforward protection of true owners by creating a duty of reasonable diligence. Guggenheim, 77 N.Y.2d at 318 -319 (1991).
21 In afﬁ rming the district court’s decision permitting an implied refusal or alternatively implying a refusal from equivocal communications on a Rule 12(b)(6) motion, the Second Circuit’s decision failed to give effect to a state limitations provision that would have allowed a claim to Nazi-looted art to be resolved on the merits. In doing so, the Second Circuit joined the federal courts nullifying common law remedies and defeating the federal policy of returning property looted during the Holocaust to its rightful owners. Review of the Second Circuit’s decision is warranted because by permitting the district court to imply a refusal from MoMA’s mere retention of the Paintings, by drawing unfavorable inferences from settlement communications that the district court itself found to be “temporizing”, and by permitting MoMA to assert Lowry’s authority to issue a refusal without having to prove it, the Second Circuit impermissibly nulliﬁed law established by the New York Court of Appeals. By doing so, the Second Circuit’s decision caused petitioners to forfeit remedies and property protected under New York law, unjustly creating a windfall for the MoMA based on its inequitable conduct during settlement negotiations. 4 In sum, the Second
4. The district court held: “Nothing in the rule’s history or purpose suggests that a party who receives a demand, and who thereafter acts in a manner that is inconsistent with the demander’s claim to ownership, should be held not to have ‘refused’ the demand simply because he failed to recite some magic words of rejection. Actions, as we all know, can sometimes speak louder than words.” Pet. App., 52a-53a. “If MoMA’s failure to return the Paintings for more than a year and a half after plaintiffs demanded them did not constitute a refusal as a matter of law (and this Court thinks that it did), then the July 20, 2005 letter—in which the defendant
22 Circuit has endorsed a rule forcing the true owner to guess at the meaning of equivocal settlement communications at the risk of forfeiting property, thereby sacriﬁcing clarity and frustrating the important restitutionary and settlement policies built into the demand-and-refusal rule. F. Petitioners Seek Review Of The Second Circuit’s Decision Because It, Like The Ninth Circuit’s Decision In Von Saher, Frustrates A Remedial Plan For Nazi-Era Crime Victims Consonant With Federal Restitution Policy
Since the Executive and Congress have entrusted the courts with carrying out the job of restoring artworks stolen in the Nazi era, the Second Circuit’s afﬁ rmance denying Petitioners frustrates the remedies envisioned by the Executve and Congress. The Ninth Circuit’s opinion in Von Saher similarly challenges both the Executive’s policy choice of conﬁding the fact-ﬁnding necessary in recovery of stolen artworks to the sound discretion of the judiciary and is a direct challenge to Congress’s policy choice in enacting the HVRA in reliance on continued conﬁdence in the courts to achieve restitution through pre-existing remedies. In these decisions, both the Second Circuit and Ninth Circuit have failed to apply clearly applicable state law remedies furthering the important federal policy of
clearly communicated its intent to keep [the Paintings] despite plaintiffs’ demand—was an act utterly inconsistent with plaintiffs’ claim of right. It thus constituted the sort of refusal contemplated by the demand and refusal rule.” Id. at 54a; “Lowry’s July 20, 2005 letter, coupled with the museum’s continued retention of the works after it was sent, indicates its continuing intent to interfere with the rights asserted by plaintiffs in their demand. This is all the ‘refusal’ the law could possibly require….” Id. at 56a.
23 promoting the restitution of Nazi-looted artwork in U.S. museums and of resolving claims on the merits. Although the return of Nazi-looted artwork has important foreign policy implications that concern the federal government, Congress made the considered judgment to allow claims for restitution of this property to be made primarily under state law. Orkin 487 F.3d at 740. Without review from this Court, the conﬂ ict between the Executive’s policies, congressional choices, and the post-1998 decisions expanding the various constructive notice doctrines will have irreparably harmed national and international confidence in the ability of the courts to adhere to traditional common law in carrying out its functions and will have irreparably frustrated the Executive’s ability to conduct foreign policy, an important concern of this Court. Medellin v. Texas, 552 U.S. 491 (2007). Therefore, this Court’s review is critical to determine whether the policy choices made by the Executive and Congress to conﬁde in the courts is still a viable one. This Court’s review is essential to ensure that the traditional state court remedies prescribed by Congress and the Executive be made available to litigants and not be disturbed by decisions like the Second Circuit’s, the Ninth Circuit’s in Von Saher, and the other decisions crafting constructive notice doctrines that have the effect of depriving claimants of access to justice.
24 II. REVIEW IS WARRANTED TO CONSIDER THE CONFLICT BETWEEN THE DIVERGENT PROCEDURAL STANDARD APPLIED TO A U.S. MUSEUM BY THE SECOND CIRCUIT ON A RULE 12(b)(6) MOTION WITH THIS COURT’S TREATMENT OF AN AUSTRIAN MUSEUM IN REPUBLIC OF AUSTRIA V. ALTMANN This Court has previously instructed that in a case involving possession and concealment of Nazi-looted art against an Austrian museum, all well-pleaded allegations are to be deemed true on a motion to dismiss. The Second Circuit, by afﬁ rming the district court’s consideration of settlement communications to work a forfeiture against the claimants, has created the problematic appearance that U.S. museums will not be subjected to the same standard as foreign museums. Signiﬁcantly, the Second Circuit’s decision has also undermined important federal policies favoring offers of compromise by permitting the district court to consider the offer in evidence and permitting the offer to work a forfeiture on a motion to dismiss, making review of this decision especially important. A. In Altmann, This Court Assumed The Truth of Allegations of Nazi Art Looting, Possession And Concealment Against An Austrian Museum and Should Require That The Same Standard Be Applied To A U.S. Museum
In Republic of Austria v. Altmann, 541 U.S. 677 (2004), this Court treated the allegations of the complaint as true and drew all inferences in the light most beneﬁcial to the complainant. The parallels between Altmann and this case are striking, yet, in the present action where
25 the allegations involved a U.S. museum, the Second Circuit afﬁ rmed a dismissal in which the district court weighed evidence, made credibility determinations, drew inferences in favor of the defendant and resolved disputed issues of fact relating to Respondent’s afﬁ rmative defense of limitations on a motion to dismiss pursuant to Rule 12(b)(6). Federal Rule of Civil Procedure 12(b)(6) provides that a complaint may be dismissed if it “fail[s] to state a claim upon which relief can be granted.” This Court has made clear that a court presented with a Rule 12(b)(6) motion must assume the truth of the allegations presented in the complaint and is restricted from considering materials outside of the complaint. Notably, in Altmann, this Court faced the same scenario presented in this case: the remarkable facts of Nazi expropriation of Austria’s Jewish population in the 1930’s and a decades-long pattern of concealment by a museum. In Altmann, this Court explicitly reafﬁrmed the unremarkable proposition that on a motion to dismiss, a court must assume the allegations of the complaint to be true. 541 U.S. at 680; Ashcroft v. Iqbal, 129 S. Ct. 1937, 1950 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 589 (2007). Regardless of the ultimate merits, cases involving cultural property and museums invoke great sensitivities relating to national identity and cultural pride. The United States has asked foreign nations to undergo a painful process of self-examination, bringing back wartime memories. In this context, the Second Circuit’s sanction of a markedly different treatment on a motion pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure of a U.S. museum facing allegations similar
26 to those faced by the Austrian museum in Altmann risks creating the problematic perception that U.S. courts are not willing to subject domestic museums to the same scrutiny prescribed for foreign museums. Accordingly, given the important international repercussions, the Second Circuit’s departure from this Court’s teachings in Altmann warrants review here. B. The Second Circuit’s Sanction Of Use Of Extrinsic Evidence To Dismiss Claims Against A U.S. Museum Frustrates Federal Restitution Policy And Promotes A Procedural Standard That Lacks Uniformity The Second Circuit’s decision approved a dismissal of a claim—based upon a settlement communication extrinsic to the complaint that contested a factual issue—after drawing negative inferences from documents extrinsic to the complaint containing offers of compromise made during settlement communications. The Second Circuit has thus permitted an intrusion on the traditional province of the jury and closed the courthouse doors based on factual ﬁndings without ﬁ rst developing a record. Generally, on a Rule 12(b)(6) motion a court may not dismiss a case based upon an afﬁrmative defense such as a statute of limitations, the validity of which is not apparent from the face of the complaint. See Blue Tree Hotels Inv. (Canada) Ltd. v. Starwood Hotels & Resorts Worldwide, Inc., 369 F.3d 212 (2d Cir. 2004). The limited nature of materials that a court can consider when confronted with a Rule 12(b)(6) motion is reinforced by Federal Rule of Civil Procedure 12(d) which mandates converting to a summary judgment motion under Rule 56 of the Federal Rules of Civil Procedure.
27 In the speciﬁc context in which this issue is raised, the Second Circuit’s permitting a district court to take procedural shortcuts not authorized by the Federal Rules of Civil Procedure has the effect of denying claimants of stolen artworks of even the opportunity to present evidence in support of their cases or to engage in discovery that would support their claims. Where the Executive has taken an international stand urging resolution of claims on the merits, the Second Circuit’s approval of such shortcuts gives the appearance to the international community that claimants are not receiving a fair opportunity to be heard. Given these foreign policy ramiﬁcations, this Court’s guidance in reestablishing both the perception and reality of justice is critical. C. Judicial Nullification Of Common Law Doctrines To Deprive Claimants of Remedies Poses Particularly Important Concerns Warranting This Court’s Exercise of Its Supervisory Powers
Traditional common law principles require a jury to determine such issues as actual or constructive notice or whether a disputed fact triggering a statute of limitations occurred. This Petition warrants review because the Second Circuit’s afﬁ rmation of a district court order that overlooked Petitioner’s right to have factual disputes determined by a jury in disregard of the accepted and usual course of judicial proceedings (S. Ct. Rule 10(a)) is part of a trend of federal courts engaging in nulliﬁcation of traditional state law remedies to such an extent that this Court should exercise its supervisory powers. The Washington Principles encouraged heirs to come forward and present their claims. By permitting the
28 district court to rely on extrinsic materials protected by Rule 408 of the Federal Rules of Evidence to trigger statutes of limitations, the Second Circuit’s decision discourages compliance with the Washington Principles and jeopardizes this Court’s policies favoring offers of compromise. This risks creating a general atmosphere of unhealthy gamesmanship and sharp practice in settlement negotiations. In this particular case, in light of the international importance of the issues involved, the Second Circuit’s decision presents an important opportunity for this Court to provide guidance on these important issues of civil procedure, which is subject to its supervisory authority. See Eugene Gressman et al., Supreme Court Practice, § 4.15, at 273 (Ninth Ed. 2007) (“On the Supreme Court rests the prime responsibility for the proper functioning of the federal judiciary.”). III. REVIEW IS WARRANTED BECAUSE THE SECOND CIRCUIT’S DECISION, TOGETHER W I T H O T H ER DECI SION S DEPRI V I NG RESTITUTIONARY REMEDIES, RISK MAKING U.S. MUSEUMS HAVENS FOR STOLEN ART The practical result of the Second Circuit’s decision is a forfeiture in favor of an entity that may not be the true owner of property belonging to it. If this and other post1998 decisions stand, true owners of art stolen during the Nazi era are left with no restitutionary remedies against U.S. museums. Accordingly, U.S. museums risk becoming havens for the tens of thousands of potentially stolen artworks in their collections. This is an important issue for this Court to address before another generation of victims passes from this earth—and it was not the result intended by the Executive and Congress when the role of
29 carrying out U.S. restitution policy was delegated to the discretion of the courts. After being advised by newspapers, magazines, formal government warnings of the risks of acquiring artworks entering the U.S. after 1932 that were created prior to 1946, U.S. museums spent decades accumulating great collections European art, often without asking for provenance paperwork. This system gave wealthy patrons large tax deductions and ﬁlled U.S. museums with toxic assets at taxpayer expense. In 2006, James Cuno, director of the American Association of Museum Directors (“AAMD”), confessed that “the amount of research to be undertaken on the tens of thousands of works of art that, by deﬁnition, may have Nazi-era provenance problems is signiﬁcant, requiring large allocations of staff time and money….” Testimony of AAMD President James Cuno to Congress, July 27, 2006 (http://www.aamd.org/advocacy/ documents/Testimony--JCuno.pdf). Following World War II, European nations enacted the world’s strictest privacy laws at the behest of the Allies. Paradoxically, these privacy laws, intended to prevent the rise of another Hitler, had the unintended consequences of depriving populations of displaced survivors of information regarding who their relatives are and what they owned. Litigation commenced in U.S. courts together with U.S. diplomatic efforts ﬁnally forced Western European nations to confront Nazi pasts, to start to open up records, and to engage in restitution and compensation efforts. See Eizenstat, Stuart E., Imperfect Justice: Looted Assets, Slave Labor, and the Unﬁnished Business of World War II (PublicAffairs, January 7, 2003). U.S. museums, in the best position to publish the
30 provenances of artworks and to determine true owners after 1945, instead remained silent as three generations of Holocaust survivors—many with claims to the museums’ art—died. Leaving stolen art in the hands of those who have acted so inequitably is deeply unfair. The Second Circuit’s decision and the Ninth Circuit’s decision in Von Saher, raise the specter that U.S. museums will receive a windfall of stolen property because of judicial nulliﬁcation of common law remedies. These decisions, if left unreviewed by this Court will leave stolen art in U.S. museums irretrievable by true owners. In relying on pre-existing common law remedies and the ability of the judiciary to enforce these remedies in crafting the Holocaust Victims Remedies Act of 1998, Congress could not have intended and did not intend the grotesque result of blocking victims from recovering property and giving museums an unjust windfall. If litigants are denied recourse through the courts, the United States will have no effective means of complying with the standards it imposes on other nations. Given the policy of the Executive to urge foreign governments and museums to disgorge stolen property from their collections and given Congress’ reliance on traditional common law remedies to return art stolen during the Nazi era to its true owners, the decision of the Second Circuit, together with other federal court decisions denying common law remedies, puts the federal judiciary at great risk of sanctioning an inequitable result—immunizing U.S. museums from scrutiny of the potentially stolen art in their collections—raising an issue of tremendous national and international importance and cultural signiﬁcance warranting this Court’s review.
31 CONCLUSION For all the foregoing reasons, petitioners respectfully request that the Supreme Court grant review of this matter. Respectfully submitted, RAYMOND J. DOWD Counsel of Record LUKE MCGRATH DUNNINGTON BARTHOLOW & MILLER LLP 1359 Broadway, Suite 600 New York, NY 10018 (212) 682-8811 firstname.lastname@example.org ROBERT PFEFFER 3225 Turtle Creek Boulevard Dallas, TX 75219 Attorneys for Petitioners
1a Appendix A APPENDIX A — SUMMARY ORDER OF THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, FILED DECEMBER 16, 2010 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER Rulings by summary order do not have precedential effect. Citation to a summary order ﬁled on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a document ﬁled with this court, a party must cite either the Federal Appendix or an electronic database (with the notation “summary order”). A party citing a summary order must serve a copy of it on any party not represented by counsel. At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on the 16th day of December, two thousand and ten. PRESENT: JOSE A. CABRANES, BARRINGTON D. PARKER, Circuit Judges, EDWARD R. KORMAN,* District Judge.
* The Honorable Edward R. Korman, of the United States District Court for the Eastern District of New York, sitting by designation.
2a Appendix A No. 10-257 M ARTIN GROSZ AND LILIAN GROSZ, Plaintiffs-Appellants, v. THE MUSEUM OF MODERN A RT, HERMANN-NEISSE COGNAC, PAINTING BY GROSZ, SELF-PORTRAIT WITH MODEL, PAINTING BY GROSZ, REPUBLICAN AUTOMATONS, PAINTING BY GROSZ, Defendants-Appellees, A MERICAN JEWISH CONGRESS, COMMISSION FOR A RT RECOVERY, FILIPPA M ARULLO A NZALONE, YEHUDA BAUER, MICHAEL J. BAZYLER, BERNARD DOV BELIAK, MICHAEL BERENBAUM, DONALD S. BURRIS, JUDY CHICAGO AND DONALD WOODMAN, TALBERT D’A LEMBERTE, M ARION F. DESMUKH, HEDY EPSTEIN, HECTOR FELICIANO, IRVING GREENBERG, GRACE COHEN GROSSMAN, M ARCIA SACHS LITTEL, HUBERT G. LOCKE, CARRIE MENKEL-MEADOW, A RTHUR R. MILLER, CAROL RITTNER, JOHN K. ROTH, LUCILLE A. ROUSSIN, WILLIAM L. SHULMAN, STEPHEN D. SMITH, FRITZ WEINSCHENK, Amici Curiae. Plaintiffs Martin and Lilian Grosz (“plaintiffs” or “Grosz heirs’’) are the legal heirs to the estate of the late
3a Appendix A painter George Grosz (“Grosz”). Three of Grosz’s works of art, Hermann-Neisse with Cognac, Self-Portrait with Model, and Republican Automatons are currently in the possession of the Museum of Modern Art in New York (“MoMA”). Plaintiffs ﬁ led suit against MoMA on April 10, 2009 in the Southern District of New York, alleging claims for, among other things, conversion, replevin, declaratory judgment, and constructive trust with respect to the works of art. On June 4, 2009, defendants moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the Complaint as time-barred. In its Decision and Order Granting Defendant’s Motion to Dismiss the Complaint, Grosz v. Museum of Modern Art, et al., No. 09-CIV-3706, 2010 WL 88003 (S.D.N.Y. Jan. 6, 2010), the District Court granted MoMA’s motion. The District Court dismissed the case as barred by the three-year statute of limitations for conversion and replevin under New York law, N.Y. C.P.L.R. § 214(3). Plaintiffs appeal the judgment of the District Court, claiming that the three-year statute of limitations had not passed at the point at which suit was brought or, in the alternative, that the statute of limitations in this case should have been subject to equitable tolling. We assume the parties’ familiarity with the facts and procedural history of this action. I. We review the dismissal of a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo, construing the complaint liberally and accepting all factual allegations in the complaint as true. See Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002).
4a Appendix A Under New York State Law, “[a]n innocent purchaser of stolen goods becomes a wrongdoer only after refusing the owner’s demand for their return.” Kunstsammlungen Zu Weimar v. Elicofon, 678 F.2d 1150, 1161 (2d Cir. 1982). This “demand-and-refusal” rule dates back to 1966, when the New York Supreme Court became the ﬁ rst court in the country to address the statute of limitations issue for innocent purchasers of chattel in art dealings. See Menzel v. List, 49 Misc. 2d 300 (NY. Sup. Ct. 1966). In Menzel, a case involving a good faith purchase of a painting by Marc Chagall, the court held that a cause of action for conversion or replevin accrues “against a person who lawfully comes by a chattel ... not upon the stealing or the taking, but upon the defendant’s refusal to convey the chattel upon demand.” Id. at 304. The Grosz heirs do not affirmatively assert that MoMA was a bad faith purchaser. Accordingly, a judgment declaring the plaintiffs’ claims as time-barred rests on whether suit was brought within three years of refusal by MoMA. All parties agree that refusal by MoMA has taken place, they only disagree on when. As the District Court explained in its thoughtful and comprehensive opinion, the record indicates that refusal took place, at the latest, in a letter from the Director of MoMA to the Grosz heirs’ agent on July 20, 2005, and that the agent of the Grosz heirs’ conﬁ rmed his understanding that refusal had taken place in at least two subsequent letters to MoMA. Because plaintiffs did not ﬁ le suit until April 10, 2010, more than three years after refusal took place, the District Court correctly dismissed the action as falling outside the statute of limitations.
5a Appendix A II. Plaintiffs claim, in the alternative, that MoMA should be equitably estopped from using the statute of limitations as a defense because plaintiffs relied upon continuing negotiations with MoMA in choosing not to ﬁle suit. Under New York law, “[t]he doctrine of equitable estoppel applies where it would be unjust to allow a defendant to assert a statute of limitations defense”—speciﬁcally, “where plaintiff was induced by fraud, misrepresentations or deception to refrain from ﬁling a timely action,” Zumpano v. Quinn, 6 N.Y.3d 666, 673-74 (N.Y. 2006) (internal quotation marks and citation omitted). “[T]he plaintiff must demonstrate reasonable reliance on the defendant’s misrepresentations.” Id. The mere existence of settlement negotiations is insufﬁcient to justify an estoppel claim. See Cranesville Block Co., Inc. v. Niagara Mohawk Power Corp, 572 N.Y.S.2d 495, 296-97 (N.Y. App. Div. 3d Dep’t 1991). Indeed, where “there was never any settlement agreement[;] continued difﬁculties in trying to settle the matter[;] no fraud or misrepresentation by defendants[; and] no agreement or promise by defendants upon which plaintiffs relied in failing to commence their lawsuit within the requirement period,” equitable estoppel does not apply. Marvel v. Capital Dist. Transp. Auth., 494 NY.S.2d 215 (N.Y. App. Div. 3d Dep’t 1985). The record indicates no fraud or misrepresentation on the part of MoMA, nor does it indicate evidence of reasonable reliance by plaintiffs on any alleged
6a Appendix A misrepresentations by MoMA. We therefore hold that the District Court correctly denied plaintiffs’ equitable tolling claim. CONCLUSION We have considered all of plaintiffs’ claims on appeal and find them to be without merit. Accordingly, the judgment of the District Court is AFFIRMED. FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court /s/
7a Appendix B APPENDIX B — DECISION AND ORDER DENYING PLAINTIFFS’ MOTION FOR RECONSIDERATION OF THE UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK, FILED MARCH 3, 2010 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 09 Civ. 3706 (CM) (THK) MARTIN GROSZ and LILIAN GROSZ, Plaintiffs, -againstTHE MUSEUM OF MODERN ART, Defendant, HERRMANN-NEISSE WITH COGNAC, SELF-PORTRAIT WITH MODEL and REPUBLICAN AUTOMATONS, Three Paintings by Grosz, Defendants-in-rem. DECISION AND ORDER DENYING PLAINTIFFS’ MOTION FOR RECONSIDERATION
8a Appendix B McMahon, J.: INTRODUCTION On January 6, 2010, this Court granted defendant’s motion to dismiss, on the ground that the statute of limitations barred Plaintiffs from maintaining an action in conversion to recover three paintings held by the museum (the defendants-in-rem). See Grosz v. Museum of Modern Art, No. 09 Civ. 3706. 2010 WL 88003 (S.D.N.Y. Jan. 6,2010). On January 19, 2010, Plaintiffs ﬁled a motion to amend their now-dismissed complaint and to supplement the record (docket no. 61). On January 20, 2010, Plaintiffs ﬁ led a motion for reconsideration or reargument (docket no. 64), which they amended on January 21, 2010 (docket no. 66). By this decision, the Court denies both of Plaintiffs’ motions. FACTS Plaintiffs Martin and Lilian Grosz (“Plaintiffs” or “Grosz Heirs”) are the son and daughter-in-law of the late German artist George Grosz. They sued the Museum of Modern Art (“MoMA”) seeking the return of three artworks currently in MoMA’s collection: Republican Automatons, Portrait of the Poet Max Herrman-Neisse mit Cognakf lasche (“Poet”), and Self-Portrait with
9a Appendix B Model (“Self-Portrait”) (collectively, the “Paintings”). On November 24, 2003, Plaintiffs ﬁ rst “demanded return” of the Paintings, via a letter from their authorized agent, Ralph Jentsch, to MoMA. (First Am. Compl., May 29, 2009 (“Compl.”), ¶ 117 & Ex. 26.) The record reﬂects that Jentsch and MoMA exchanged a series of letters—some of them quite heated—and had several meetings between July 20, 2005, and April 12, 2006. (See Decl. of L. Solomon, June 4, 2009 (“06/04/2009 Solomon Decl.”), Ex. A.) At no time during this process did MoMA acknowledge Plaintiffs’ ownership of the Paintings or relinquish custody of them to Plaintiffs. Plaintiffs waited until April 10, 2009, to commence this action. The statute of limitations in a conversion case is three years. In a case where the defendant did not come into possession of the converted article in bad faith, the three year period begins to run “not upon the stealing or the taking, but upon the defendant’s refusal to convey the chattel upon demand.” Menzel v. List, 49 Misc. 2d 300, 304·05 (N.Y. Sup. Ct. 1966) (citing Cohen v. M. Keizer, Inc., 246 App. Div. 277 (1st Dep’t 1936)). Plaintiffs alleged that their action was commenced before the statute of limitations ran because MoMA rejected their demand for return of the Paintings by a letter from MoMA’s director, Glenn Lowry, to their agent, Ralph Jentsch, dated April 12, 2006. (Compl. ¶ 31.) Plaintiffs attached to their pleadings their November 24, 2003 demand letter and a portion of MoMA’s alleged refusal letter dated April 12, 2006. (Id. Exs. 26- 27.)
10a Appendix B In their Complaint,1 Plaintiffs acknowledged that there was intervening communication between the parties, and acknowledged that this communication included, inter alia, “MoMA’s absolute refusal to toll the statute of limitations.” (See, e.g., id. ¶ 23). Plaintiffs did not append any of that communication to their Complaint. On June 4, 2009, MoMA moved to dismiss the amended complaint as barred by the statute of limitations. In support of its motion, MoMA appended portions of that intervening correspondence. The museum argued that this correspondence was “integral” to Plaintiffs’ Complaint because it bore on Plaintiffs’ allegation that the Museum had not refused its demand until April 12, 2006. (Mem. of Law in Supp. of Mot. to Dismiss, June 4, 2009 (“MTD”), at 18-19.) Plaintiffs did not object to MoMA’s submission of this correspondence. Nor did they dispute MoMA’s assertion (later adopted by this Court) that the correspondence between the parties was integral to the Complaint. Instead, Plaintiffs attached yet another letter from the correspondence that, in their view, bore on the issue of demand-and-refusal. (See Decl. of R. Dowd, June 25, 2009 (“06/25/2009 Dowd Decl.’’), Ex. 1 (attaching January 18, 2006 letter).) At no time did Plaintiffs argue that the Court would have to convert the motion to dismiss into one for summary judgment in order to consider any of these documents.
1. Plaintiffs amended their complaint as of right by ﬁ ling an amended pleading on May 29, 2009. References in this opinion to the “Complaint” are in fact to the Amended Complaint.
11a Appendix B While the motion to dismiss was sub judice, the parties engaged in discovery. On October 26, 2009, Plaintiffs sought production of the minutes of certain meetings of MoMA’s Board of Trustees. Defendant turned over those minutes within a matter of weeks. On November 20, 2009, Plaintiffs wrote a letter to this Court, asking permission to “supplement” their opposition to the motion to dismiss with selected minutes from meetings of MoMA’s Board of Trustees and Executive Committee that were held between July 26, 2005 and April 11, 2006. (the “Meeting Minutes”). (See Decl. of R. Dowd, Nov. 17, 2009 (“11/17/2009 Dowd Decl.”), Exs. 1&2.) Plaintiffs argued that these Meeting Minutes supported their position that MoMA did not refuse Plaintiffs’ demand until April 12, 2006. MoMA opposed Plaintiffs’ request. In a letter dated November 24, 2009, the Museum argued that minutes were not material to the disposition of its motion to dismiss, because (unlike the parties’ correspondence) they had not been sent to Plaintiffs during Lowry’s negotiations with Jentsch, and so could not have affected Plaintiffs’ perception about whether and when MoMA rejected their demand for the Paintings. However, in case the Court agreed to consider Plaintiffs’ November 20 submission, MoMA asked that the Court also take into account certain testimony from Ralph Jentsch’s deposition, which they attached. The tenor of that testimony (which the Court did not read at the time) will be discussed later in this opinion.
12a Appendix B There followed the usual ﬂurry of correspondence back and forth. Plaintiffs sent two letters, one dated November 25, 2009, and one dated December 1, 2009; and MoMA responded in a letter dated December 2. Plaintiffs appended additional questions and answers from Jentsch’s deposition testimony to their November 25 letter. And in the December 1 letter, Plaintiffs mentioned the possibility of amending their Complaint yet again. Since Plaintiffs had already used their one amendment as of right, further amendment would have required leave of Court (see Fed. R. Civ. P. 15(a)(2)) but Plaintiffs did not make a motion for leave to amend. At the time these letters were ﬂying back and forth. the Court had already done considerable work on the motion to dismiss, based solely on the record submitted in June 2009. The Court had reached tentative conclusions and was in the process of drafting an opinion. I had no inclination to start the process over. Furthermore, I recognized that consideration of deposition testimony (which could not possibly have been relied on in drafting the Complaint) and most likely consideration of the Meeting Minutes—would require me to convert the motion to dismiss into a motion for summary judgment. It was inevitable that the parties would greet any such announcement with the submission of yet more material in support of their respective arguments. So the Court declined to consider any of the parties’ submissions—not the Meeting Minutes, not Jentsch’s deposition testimony—and directed the parties to end the battle of correspondence. See Grosz v. Museum of Modern Art, No. 09 Civ. 3706, Mem. Endorsement, Dec. 2, 2009 (docket no. 47).
13a Appendix B The decision that was already in the works in December 2009 issued on January 6, 2010. See Grosz v. Museum of Modern Art, No. 09 Civ. 3706, 2010 WL 88003 (S.D.N.Y. Jan. 6, 2010) (the “January 6 Decision”). The Court granted MoMA’s motion to dismiss, holding principally that the statute of limitations had begun to run no later than July 20, 2005, when MoMA refused Plaintiffs’ demand for purposes of the demand-and-refusal rule. The Court also concluded that the action was barred using various other possible refusal dates, and even allowing for a brief tolling of statute early in 2006. Familiarity with the January 6 Decision is presumed. DISCUSSION I. Legal Standard
To prevail on a motion for reconsideration, the movant must demonstrate “an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.” See Doe v. New York City Dept. of Soc. Servs., 709 F.2d 782, 789 (2d Cir. 1983) (citations omitted). The Court’s review “is narrow and applies only to already-considered issues; new arguments and issues are not to be considered.” See Morales v. Quintiles Transnational Corp., 25 F. Supp. 2d 369, 372 (S.D.N.Y. 1998). A motion for reconsideration “is not a substitute for appeal and ‘may be granted only where the Court has overlooked matters or controlling decisions which might have materially inﬂuenced the earlier decision.’” See id. (citations omitted).
14a Appendix B Plaintiffs’ motion for reconsideration is denied because they have demonstrated none of the three required factors. A. There Has Been No Intervening Change of Controlling Law
Plaintiffs point to no intervening change of controlling law on the subject of the statute of limitations for conversion claims, or the demand-and-refusal rule. They do cite a case that was not included in the opposition to the motion to dismiss—Ball v. Liney, 3 Sickels 6 (N.Y. Ct. App. 187). But a case decided more than 125 years ago can hardly be considered new law. In any event, Ball supports the Court’s conclusion that Plaintiffs’ claims are time barred. In Ball, the New York Court of Appeals held that a person who had acquired property in good faith would be afforded only a “brief period” to investigate a claim that the property had been stolen before his continuing possession of the property would ripen into conversion under the demand-and-refusal rule and the three year statute of limitations would begin to run. 3 Sickels at 12-13. The Ball court concluded that even three months was too long to qualify as a “brief period,” and specifically stated that it could “hardly conceive of a case where the bailee would be justiﬁed in detaining property from the real owner, from May 15 to August 6, nearly three months, to inquire into the title.” Id. at 13 (emphasis added). This case involves claims to works of art that are alleged to have fallen prey to Nazi looting in the years
15a Appendix B leading up to World War II. It would hardly be appropriate to measure the “brief period” for looking into the Paintings’ ownership in days, or weeks, or even the few months that were not brief enough for the Ball court. Matters of provenance are notoriously complicated, and the circumstances under which the Paintings made their way to MoMA (as alleged by Plaintiffs) made the museum’s investigation difﬁcult. But nothing in Ball suggests that the period for investigation allowed by the Court in this case-twenty months from the date Plaintiffs made their demand— would qualify as “brief’ for the purposes of New York’s demand and refusal rule. Moreover, as discussed in the January 6 Decision, the date on which the Court concluded that Plaintiffs’ conversion accrued was three months after the date by which MoMA agreed to respond, one way or the other, to Plaintiffs’ demand. Grosz v. Museum of Modern Art, No. 09 Civ. 3706, 2010 WL 88003, at *12-13 & n.7 (S.D.N.Y. Jan. 6, 2010). B. There Is No New Evidence That Would Affect the Disposition of the Case Plaintiffs have not submitted any “new evidence” that would alter the Court’s original determination. The purported “new evidence” consists principally of the Meeting Minutes from MoMA’s Executive Committee dated April 4, 2006, and MoMA’s Board of Trustees dated April 11, 2006. (Mem. of Law in Supp. of Mot. for Recons., Jan. 20, 2010 (“Pls. Br.”), at 16.)
16a Appendix B Plaintiffs allege that the Meeting Minutes demonstrate that the Museum did not reject their demand until the Board’s April 11, 2006 meeting, at which the Board voted to adopt the Report of Nicholas deB. Katzenbach. Katzenbach had concluded that the museum did nothing wrong by refusing to turn the Paintings over to Plaintiffs.2 However, the Meeting Minutes add nothing substantive to the record that was already before the court in connection with the motion to dismiss. It has always been Plaintiffs’ position in this lawsuit that “rejection” did not occur until Katzenbach completed his work and the Board afﬁrmed it. Plaintiffs attached to their Complaint the April 12, 2006 letter in which Katzenbach’s conclusions, and the Board’s decision to adopt his recommendations, were conveyed to Plaintiffs (via Jentsch). So the “new evidence” that Plaintiffs want the Court to consider—the minutes of the meeting at which the decisions memorialized in the April 12 letter were taken—is not “new” at all. The Court has already considered Plaintiffs’ argument that the Board’s April 11 action triggered the statute of limitations, and
2. The Court sees no need to rehash everything that is contained in the original decision, but I take this opportunity to remind the reader that, in January 2006, MoMA’s Board comm issioned for mer Att or ney G enera l K atzenbach t o re-examine the work done on the provenance of two of the Paintings (Self-Portrait and Poet) and to provide his “opinion and recommendations with respect to two paintings in the Museum’s Collection by the artist George Grosz.” (06/04/2009 Solomon Decl. Ex. E (Katzenbach Report (cover letter), at 1).) Katzehbach did as asked and submitted a report to the Board on March 22, 2006. The Board voted to adopt the Report on April 11, 2006.
17a Appendix B that nothing that happened earlier constituted “refusal” as a matter of law. For the reasons discussed exhaustively in the January 6 Decision, I rejected plaintiffs’ contention. Second, I agree with MoMA that internal Museum documents reﬂecting communications among MoMA’s Executive Committee and its Board of Trustees and Minutes of Board meetings—documents that were not shared with Plaintiffs until many months after this lawsuit commenced—have no bearing on when the statute of limitations began to run. In a case governed by the demand-and-refusal rule, the issue is when, by word or deed, MoMA conveyed to Plaintiffs its intent to continue interfering with their asserted right to possession of the disputed property. That is the meaning of “refusal.” See Feld v. Feld, 279 A.D.2d 393, 395 (N.Y. App. Div. 1st Dep’t 2001) (“A refusal need not use the speciﬁc word ‘refuse’ so long as it clearly conveys an intent to interfere with the demander’s possession or use of his property.”) (citation omitted). Documents that the Plaintiffs never saw could not have conveyed anything to them, and so are irrelevant. The Court has held that Plaintiffs should have concluded that the Museum had refused their demand long before the Board voted to afﬁ rm the Katzenbach Report on April 11, 2006, based on the Museum’s words (Lowry’s July 20, 2005 letter to Jentsch) and its deeds (its continued refusal to turn over the Paintings). Grosz v. Museum of Modern Art, No. 09 Civ. 3706, 2010 WL 88003, at *9-10 (discussing Borumand v. Assar). In fact, as discussed in the January 6 Decision, the museum rejected Plaintiffs’ demand over and over again—by keeping
18a Appendix B the Paintings for years after the demand was made; by sending letters saying “the available evidence does not lead to any deﬁnitive conclusion that challenges the Museum’s ownership” and “we cannot reach the conclusion that restitution ... would be appropriate at this time”; by suggesting shared ownership or arbitration—even by delaying and temporizing (as the museum surely did). An aggrieved owner of property cannot delay the accrual of his cause of action for conversion indeﬁnitely by eliciting multiple rejections from the person who is interfering with his right to possession. And once his claim accrues, the clock does not reset to zero every time the parties reopen the subject of who owns the disputed property. But even if I were to consider the Meeting Minutes that plaintiff submits, they would not save the Complaint from dismissal. The Meeting Minutes tend to conﬁ rm, rather than undermine, MoMA’s contention that Plaintiffs’ claim accrued far earlier than April 12, 2006. For example, the minutes from MoMA’s April 11, 2006 Board of Trustees’ meeting—the meeting at which the Board adopted the Katzenbach Report—chronicle the history of the museum’s interactions with Plaintiffs. They recount that the museum had offered “to ‘share’ ownership [with Plaintiffs] pending further deﬁ nitive research” on the Paintings (Letter from R. Dowd to the Court, Nov. 25, 2009 (“11/25/2009 Dowd Decl.”), Ex. A at 3), and to “arbitrate and/or mediate” the dispute (id.; see also id. Ex. D at 3 (July 26, 2005 minutes).) The January 6 Decision explains why both sharing and arbitrating are inconsistent with Plaintiffs’ claim of ownership in the disputed property, and in and of themselves, indicate rejection of the demand that the Paintings be conveyed to Plaintiffs. Additionally,
19a Appendix B minutes from MoMA’s April 4, 2006 Executive Committee meeting state that “the consensus” of the Trustees on that date more than three years before Plaintiffs ﬁ led suit” was that while the Museum would always remain open to studying any new facts that Mr. Jentsch might wish to bring before the Museum, without more, the Museum would stand with its position rejecting his claims.” (Id. Ex. D at 2 (April 4, 2006 minutes) (emphasis added).) The only fair inference one can draw from that statement is that the Museum had already rejected Plaintiffs’ demand by April 4, 2006. C. No Manifest Injustice Would Result From Denial of Plaintiffs’ Motion
Finally, Plaintiffs have not argued, and this Court cannot conclude, that manifest injustice would result from a denial of their motion for reconsideration. Plaintiffs suggest in their motion papers that this Court could only have reached its conclusion on the limitations question by failing to “take judicial notice of the fact that Adolph Hitler came to power in March 1933,” and by underestimating the signiﬁcance of the Holocaust. (Pls. Br. at 24.) It may be that Plaintiffs are suggesting that it would work a manifest injustice if the Court were not to reconsider its decision because the circumstances in which Grosz lost his Paintings were themselves unjust. If so, the Court cannot accept the argument. First, it is obviously not the case that the Court was unaware of the circumstances that led to the loss of Grosz’s paintings. Hitler’s rise to power and its effect on Grosz’s
20a Appendix B career were documented in the January 6 Decision. See. e.g., Grosz v. Museum of Modern Art, No. 09 Civ. 3706, 2010 WL 88003, at *1 (noting that Hitler ascended to Chancellor in 1933); id. (“... the Third Reich branded him [Grosz] an ‘enemy of the state”’); id. at 2 (“[T]he three Paintings fell prey to a network of unscrupulous art professionals, who took advantage of the political climate of the time to divest Grosz of his ownership.”). However, the Court was confronted with a legal, not a historical, question: how soon after Plaintiffs demanded return of the Paintings in November 2003 did their cause of action for conversion accrue, and the statute of limitations begin to run? The answer to that question is not a function of circumstances in Germany in the 1930s and 1940s, unspeakably vile though they were. It may be that Plaintiffs are contending (albeit obliquely) that the statute of limitations ought to be waived because Grosz was a victim of the hideous regime known as the Third Reich. Plaintiffs append several treatises about the loss of art during the period of Nazi domination and the Holocaust to their proposed amended complaint. No such argument was made in opposition to the motion to dismiss—it was not, for example, the basis for Plaintiffs’ claim of equitable tolling—so the Court cannot consider it on a motion for reconsideration. But any such suggestion would lack merit. Aside from equitable tolling, New York does not recognize case-by-case exceptions to its statutes of limitations. For the reasons discussed in the January 6 Decision, the record in this case does not support a ﬁnding that the statute should be equitably tolled. Furthermore, as discussed in that opinion, even if the equitable tolling
21a Appendix B argument made by Plaintiffs in opposition to MoMA’s motion were accepted, it would not save Plaintiffs’ claims from dismissal on limitations grounds. See id., 2010 WL 88003, at *14-16. Accordingly, nothing in the record suggests that manifest injustice would result from a denial of Plaintiffs’ motion. II. Whether the Court Should Have Converted the Motion to Dismiss to a Motion for Summary Judgment Is Not Properly Considered On A Motion For Reconsideration Plaintiffs argue that the Court should reconsider the January 6 Decision because it should not have considered the documents submitted by both sides in connection with the museum’s motion to dismiss without converting the motion into one for summary judgment. As noted above, Plaintiffs did not make this suggestion until after the motion was decided against them. That alone makes it improper for the Court to consider the issue on a motion for reconsideration. Ofﬁcial Comm. of the Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F. 3d 147, 159 (2d Cir. 2003) (argument waived if made for the ﬁ rst time on a motion for reconsideration). However, two things warrant brief discussion. First, in this Circuit (though not in all circuits), affirmative defenses are routinely considered under
22a Appendix B Federal Rule Civil Procedure 12(b)(6). See, e,g., McKenna v. Wright, 386 F.3d 432, 436 (2d Cir. 2004) (citing cases); see also 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1226 (3d ed. 2004) (“[The current trend in the cases is to allow [the statute of limitations defense] to be raised by a motion to dismiss under Rule 12(b)(6) when the defect appears on the face of the complaint.”). Plaintiffs clearly understood this. They failed to object to MoMA’s submission of the portions of the parties’ correspondence that it deemed relevant to the limitations issue; and they submitted additional portions of that correspondence for the Court’s consideration as part of their response to defendant’s motion. Second, although courts in this jurisdiction refer to the statute of limitations in the context of the demand-andrefusal rule as an “afﬁrmative defense,” see, e.g., Lehman v. Lehman, 591 F. Supp.1523, 1527 (S.D.N.Y. 1984), in a cause of action for conversion against a good faith purchaser of chattels, “demand and refusal are substantive elements” of the claim, Deweerth v. Baldinger, 836 F.2d 103, 107 n.3 (2d Cir. 1987) (citing cases), rev’d on other grounds by Solomon R. Guggenheim Found. v. Lubell, 153 A.D.2d 143 (1st Dep’t 1990); accord Kunstsammlungen Zu Weimar v. Elicofon, 678 F.2d 1150, 1161 (2d Cir. 1982). Therefore, Plaintiffs were required to plead compliance with the statute of limitations in their complaint, which necessarily rendered the parties’ correspondence “integral” to the complaint. This obviated any need to convert the motion to dismiss to a motion for summary judgment. Of course, when Plaintiffs afﬁrmatively pleaded that they commenced this action within three years of the Museum’s denial of Plaintiffs’ demand for the Paintings, Plaintiffs attached to
23a Appendix B their complaint the lone letter that they contend supported this allegation. But Plaintiffs did not thereby restrict the Court to considering only the April 12, 2006 letter. A court may consider matters outside the pleading for the purposes of adjudicating a motion to dismiss if those documents are “integral” to a plaintiff’s claims— even if the plaintiff fails to append or allude to them to his complaint. As the Second Circuit explained in Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 44 (2d Cir. 1991), cert. denied, 503 U.S. 960 (1992), “Plaintiffs’ failure to include matters of which as pleaders they had notice and which were integral to their claim—and that they apparently most wanted to avoid—may not serve as a means of forestalling the district court’s decision on the motion.” Otherwise, a plaintiff could “evade a properly argued motion to dismiss simply because plaintiff has chosen not to attach the [document] to the complaint or to incorporate it by reference.” I. Meyer Pincus & Assocs., P.C. v. Oppenheimer & Co., 936 F.2d 759, 762 (2d Cir. 1991) (citations omitted). Plaintiffs clearly relied on the entire course of correspondence between the parties when they framed their Complaint. By affirmatively pleading that the April 12, 2006 letter was MoMA’s “refusal” of their demand, Plaintiffs necessarily represented that those earlier letters did not convey any “refusal.” This made the correspondence between the parties “integral” to Plaintiffs’ claim of conversion, specifically to the contention in their Complaint that they had complied with the statute of limitations. Plaintiffs could not evade MoMA’s statute of limitations argument by ignoring the
24a Appendix B earlier letter that was unfavorable to their point of view— including especially the July 20, 2005 letter from Lowry to Jentsch that MoMA (and eventually the Court) identiﬁed as the Museum’s actual refusal of Plaintiffs’ demand for purposes of the demand-and-refusal rule. 3 As will be seen in connection with the Court’s discussion of Plaintiffs’ motion for leave to amend their amended complaint, the Court might have saved itself a lot of work if it had converted the motion last December. In light of the testimony of Plaintiffs’ agent, there is absolutely no way Plaintiffs could have raised a genuine issue of material fact that would have saved their claim from dismissal. (See infra Part III). But the Court was not required to convert the motion, and plaintiffs are not entitled to reconsideration on that basis. III. The Motion To Amend The Complaint Is Denied Because Amendment Would Be Futile In addition to moving for reconsideration of the prior decision, Plaintiffs have moved for leave to amend their Complaint and to supplement the record. Plaintiffs argue
3. The July 20, 2005 letter was effectively brought to the Court’s attention in another way—and by Plaintiffs themselves— when Plaintiffs chose to call the Court’s attention to a letter dated January 18, 2006, as support for their argument that the statute of limitations should be equitably tolled. (See 06/25/2009 Dowd Decl. Ex. 1 (attaching the January 18 letter).) The January 18 letter refers to earlier correspondence between the parties, leading the Court inexorably back to the letter that proved fatal to Plaintiffs’ lawsuit.
25a Appendix B that amendment is required because the so-called “new evidence” discussed above—the Meeting Minutes, in addition to select excerpts from the deposition of Ralph Jentsch, which they ﬁ rst submitted to the Court last November—supports their claim that MoMA did not refuse Plaintiffs’ demand until April 12, 2006. MoMA responds that amendment would be futile, because none of the evidence proffered by Plaintiffs in support of the motion could possibly alter the Court’s conclusion that their claims are barred as a matter of law. MoMA is correct. Although leave to amend is to be freely granted, courts have discretion to deny an application for leave where amendment would be futile. See Marchi v. Bd. of Coop. Educ. Servs., 173 F.3d 469, 477-78 (2d Cir. 1999) (citation omitted). Here, there can be no question that amendment would be futile. Plaintiffs’ motion for leave to amend relies on the same argument that the court has already rejected in connection with their claim of “new evidence:” namely, that the April 11, 2006 Board Minutes and certain other minutes from MoMA’s Executive Committee compel the conclusion that the Museum did not really reject their demand until April 12, 2006, when Lowry conveyed the results of the April 11 Board meeting to Jentsch. Both motions are predicated on the assumption that the Court would have denied defendants’ motion to dismiss if only the Court had considered the evidence Plaintiffs proffered to
26a Appendix B it in November 2009. For the reasons discussed at length above, that assumption is simply wrong. However, i n order t o decide t he mot ion for reconsideration and the motion for leave to amend, I have had to become familiar with the submissions that I refused to consider last November. Among the evidence submitted to the Court at that time is certain deposition testimony of Ralph Jentsch, Plaintiffs’ agent and the person who dealt with MoMA on their behalf. Jentsch’s testimony dooms Plaintiffs’ contention that their lawsuit was timely brought. Both sides submitted excerpts from Jentsch’s deposition to the court last November. To support their contention that MoMA did not reject Plaintiffs’ demand until after the April 11, 2009 Board meeting, Plaintiffs offered the following: Q: Now, is that true what Mr. Lowry wrote to you that any decision on a matter like this must be considered by the museum’s trustees? *** A: Yes, he said that many times to me. Q: Okay, what did he say to you many times? A: Well, that any decision about the restitution could not be made by him but only by the museum’s trustees.
27a Appendix B (11/25/09 Dowd Decl., Ex. B (Jentsch Tr. 295:10296:3).) Plaintiffs did not send the court the following additional excerpts from Jentsch’s deposition—but MoMA did: Q: Did any representative of MoMA ever agree to transfer any of the three works to you or to the Grosz Estate? A: That would have—no. Q: And did you—you said you were puzzled before the May meeting. Were you—were you puzzled after the meeting as well when Mr. Lowry kept saying, “We have a different opinion?” A: I got suspicious. Q: When did you—when did you first reach the conclusion that MoMA was not returning these works of art to you? *** A: After that letter of Glenn Lowry, which I think was July 20th, August. Q: July 20th of 2005? A: Yes.
28a Appendix B (Letter from L. Solomon to the Court, Nov. 24, 2009 (“11/24/2009 Solomon Decl.”), Ex. A (Jentsch Tr. 132:8133:2) (emphasis added).) In a second excerpt, Jentsch testiﬁed as follows: Q: What was your understanding of MoMA’s position when you got this letter [the July 20, 2005 letter from Glenn Lowry]? A: My understanding was that MoMA never had the intention to return or accept our claim and that I was dragged along all of the time, that the time frame was extended twice; that, in spite of all the polite exchange, exchanging words, there was no serious intention to return any of the works, nor acknowledge any of the ﬁndings of the documentation which I provided being taken seriously. Q: Did you communicate that to Mr. Lowry? A: Yes. Q: When did you do that? A: In my letter of August 11th. (Id. at Ex. B (Jentsch Tr. 143:11-144:7).) MoMA argues that the portions of Jentsch’s testimony it submitted render any attempt at amendment futile. I agree. Jentsch’s own words conﬁrm his understanding that the museum had rejected Plaintiffs’ demand for the return
29a Appendix B of the Paintings well before April 2006. Although Jentsch stated that he believed that MoMA’s Trustees would have to make any decision to “restitute” the Paintings, he clearly explained that it was his understanding that the demand had been refused in July 2005, the very date found by the Court to be the date MoMA unmistakably communicated its refusal to Plaintiffs. Jentsch’s testimony thus underscores the correctness of the Court’s original conclusion—as well as its subsidiary ﬁnding that Jentsch’s January 5, 2006 letter to Lowry acknowledged the museum’s rejection of Plaintiffs’ demand. Grosz v. Museum of Modern Art, No. 09 Civ. 3706, 2010 WL 88003, at 14-15 (S.D.N.Y. Jan. 6, 2010). Plaintiffs’ argument is, and has always been, that the limitations clock “reset” and began to run all over again when MoMA’s Board decided to re-examine the Museum’s decision and retained Katzenbach. That, of course, is not the way statutes of limitations work. Once a cause of action accrues, the limitations period begins to run, and it continues to run—regardless of intervening events— unless something tolls it. Plaintiff afﬁrmatively pleaded that the museum refused to toll the statute of limitations (Compl. ¶ 23), so once the limitations period started to run it kept on running. Furthermore, even if the Board’s decision to revisit the matter somehow equitably tolled the statute as of January 18—which was Plaintiffs’ argument in opposition to the original motion—Plaintiffs still waited too long to bring suit. See Grosz, 2010 WL 88003, at 15. Nothing in the proposed amended Complaint cures that defect.
30a Appendix B For these reasons, the motion for leave to amend is denied as futile. CONCLUSION Plaintiffs’ motion for reconsideration (docket no. 66) is denied. Plaintiffs’ motion for leave to amend (docket no. 61) is denied. The Clerk of the Court is instructed to remove these motions from the Court’s outstanding motion list and to close the case. This constitutes the decision and order of this Court. Dated: March 3, 2010 /s/ U.S.D.J. BY ECF TO ALL COUNSEL
31a APPENDIX CAppendix C — JUDGMENT OF THE UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK, FILED JANUARY 11, 2010 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 09 CIVIL 3706 (CM) MARTIN GROSZ AND LILIAN GROSZ Plaintiffs, -againstTHE MUSEUM OF MODERN ART, Defendant HERRMANN-NEISSE WITH COGNAC, SELF-PORTRAIT WITH MODEL AND REPUBLICAN AUTOMATONS, Three Paintings by Grosz, Defendants-in-rem. JUDGMENT The defendants having moved to dismiss, and the matter having come before the Honorable Colleen McMahon, United States District Judge, and the Court, on January 10, 2010, having rendered its Decision and
32a Appendix C Order, granting defendants’ motion to dismiss, dismissing the case and declaring the pending Objection to the Magistrate Judge’s ruling is moot, it is, ORDERED, ADJUDGED AND DECREED: That for the reasons stated in the Court’s Decision and Order dated January 10, 2010, the defendants’ motion to dismiss is granted, the case is dismissed and the pending objection to the Magistrate Judge’s ruling is moot. Dated: New York, New York January 11, 2010 J. MICHAEL McMAHON Clerk of Court BY: /s/ Deputy Clerk
33a Appendix D APPENDIX D — DECISION AND ORDER OF THE UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK, FILED JANUARY 6, 2010 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 09 Civ. 3706 (CM) (THK) MARTIN GROSZ and LILIAN GROSZ, Plaintiffs, -againstTHE MUSEUM OF MODERN ART, Defendant, HERRMANN-NEISSE WITH COGNAC, SELFPORTRAIT WITH MODEL and REPUBLICAN AUTOMATONS, Three Paintings by Grosz, Defendants-in-rem. DECISION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS THE COMPLAINT McMahon, J.: INTRODUCTION George Grosz was an early twentieth-century German artist and prominent member of a movement known as
34a Appendix D the Berlin Dada and New Objectivity Group. His artwork, consonant with the larger movement, was strongly antitotalitarian and therefore anti-Nazi. (See First Am. Compl. (“Complaint”), May 28, 2009, ¶¶ 2-3.) Grosz’s son and daughter-in-law, Martin and Lilian Grosz (plaintiffs in this lawsuit), explain that, although Grosz was not Jewish, his work “typiﬁed” the kind of “‘degenerate’ art Hitler hated.” Id. ¶ 13.) As a result, Grosz was forced to ﬂee Germany in the wake of Hitler’s ascension to Chancellor in 1933. Id. ¶¶ 3, 45-46.) After his departure, the Third Reich branded him an “enemy of the state” (id. ¶ 124), and in March 1938, the government rendered him “stateless,” revoking his citizenship and conﬁscating what remained of his German assets (id. ¶ 102). This action relates to the ownership of three of Grosz’s caricatural paintings, which are alleged to have fallen prey to Nazi looting (albeit indirectly) in the years between Grosz’s emigration from Germany in 1933 and the German government’s conﬁscation of his assets in 1938. Speciﬁcally, the plaintiffs allege that the Museum of Modern Art (“MoMA”) obtained and now wrongfully holds: Hermann-Neisse with Cognac (“Poet”), Self-Portrait with Model (“Self-Portrait”), and Republican Automatons (“Automatons”) (collectively, the “Paintings”). (Id. ¶¶ 1115.) The plaintiffs seek declaration of title and replevin for each, as well as damages for unlawful dominion and control over the artworks, attorneys’ fees, costs, and disgorgement
35a Appendix D of proﬁts and revenues received by MoMA from possession of the Paintings. (Id. ¶¶ 25, 149-74 (claims).)1 Because this action is barred by the statute of limitations, the defendant’s motion to dismiss is granted. DISCUSSION I. Standard of Review
In deciding a motion to dismiss pursuant to Rule 12(b) (6), the Court must liberally construe all claims, accept all factual allegations in the complaint as true, and draw all reasonable inferences in favor of the plaintiff. See Cargo Partner AG v. Albatrans, Inc., 352 F.3d 41, 44 (2d Cir. 2003); see also Roth v. Jennings, 489 F.3d 499, 510 (2d Cir. 2007). To survive a motion to dismiss, “a complaint must contain sufﬁcient factual matter ... to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant
1. Plaintiffs’ Complaint includes two sets of paragraphs numbered 149-171, presumably because, when they amended their initial pleading, they failed to adjust the numbering of the paragraphs. For ease of reference, the Court will use the plaintiffs’ numbering but will indicate parenthetically when the numbering refers to the “claims” portion of plaintiffs’ complaint (located at pages 33-36).
36a Appendix D is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal quotations, citations, and alterations omitted). Thus, unless a plaintiffs well-pleaded allegations have “nudged [its] claims across the line from conceivable to plausible, [the plaintiff’s] complaint must be dismissed.” Id. at 570; Iqbal, 129 S. Ct. at 1950-51. In deciding a motion to dismiss, this Court may consider the full text of documents that are quoted in the complaint or documents that the plaintiff either possessed, or knew about and relied upon in bringing the suit. Rothman v. Gregor, 220 F.3d 81, 88-89 (2d Cir. 2000); San Leandro Emergency Med. Group Proﬁt Sharing Plan v. Philip Morris Cos., 75 F.3d 801, 808 (2d Cir. 1996). II. Timeliness The lapse of a limitations period is an afﬁ rmative defense that a defendant must plead and prove. Fed. R. Civ. P. 8(c)(1). However, a defendant may raise an afﬁ rmative defense in a pre-answer Rule 12(b)(6) motion if the defense appears on the face of the complaint. McKenna v. Wright, 386 F.3d 432, 436 (2d Cir. 2004) (afﬁ rmative defense of qualiﬁed immunity); see also 5 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1226 (3d ed. 2004) (“[T]he current trend in the cases is to allow [the statute of limitations defense] to be raised by a motion
37a Appendix D to dismiss under Rule 12(b)(6) when the defect appears on the face of the complaint.”). Timeliness is “material when testing the sufﬁciency of a pleading.” Fed. R. Civ. P. 9(f). Ill. Background The Complaint alleges that George Grosz created the Paintings at various dates between 1920 and 1929. It appears undisputed that he created Automatons ﬁ rst, in 1920 (id. ¶ 15), followed by Poet, which he painted in 1927 or 1928 (id. ¶ 38 (1927); id. ‘¶ 11, (1928)). Self-Portrait is alleged to have been created in either 1928 or 1929. (Id. ¶ 39 (1928); id. ¶ 13 (1929).) The plaintiffs contend that each of the Paintings was consigned at one time or another to Alfred Flechtheim, Grosz’s art dealer (id. ¶¶ 38-39), and that after Flechtheim’s death in 1937, the three Paintings fell prey to a network of unscrupulous art professionals, who took advantage of the political climate of the time to divest Grosz of his ownership. First, they allege that within one month of the dealer’s death, an opportunistic art historian (Charlotte Weidler) stole Poet, which she is alleged to have hidden in Germany until 1952, when she sold it to MoMA. Less than one year later, in February 1938, a plundering Dutch art dealer (Carel van Lier) stole and then purported to auction off Self-Portrait and Automatons. The plaintiffs allege that the auction was a “sham,” designed to obfuscate the true nature of van Lier’s operations—laundering Nazi-looted art—as evidenced by the fact that van Lier “purchased” both pieces himself at suspiciously below market prices. Shortly thereafter, the Dutch dealer sold the pieces to private collectors for a handsome proﬁt.
38a Appendix D Automatons eventually made its way to Canada; MoMA purchased it from its owner in 1946. (Id. ¶¶ 5859.) Eight years later, after a failed attempt to sell SelfPortrait, Leo Lionni, then-Art Director for Fortune, gifted the piece to the museum in 1954. (Id. ¶ 56.) The precise path the Paintings allegedly took on their journey from Berlin to MoMA, and the role of each of the alleged middlemen, is chronicled in detail below. A. Grosz’s Art Dealer: Alfred Flechtheim
George Grosz’s art dealer was Alfred Flechtheim, who owned and operated Galerie Flechtheim (the “Galerie”), which had outposts in both Berlin and Dusseldorf. (Id. ¶ 47.) Grosz’s ﬁ rst art exhibition took place at Flechtheim’s Berlin gallery in the early 1920s. (Id. ¶ 37.) The Complaint does not specify which works were displayed, but states that the show was such a resounding success that, by 1925, Galerie Flechtheim had entered into an agreement with Grosz to be his exclusive dealer. (Id.) The terms of the agreement provided that Grosz would receive monthly payments of 300 to 800 Reichmarks (“RM”) in exchange for consigning his work solely to the Galerie. (See id.) Pursuant to this agreement, Poet was consigned to Flechtheim in 1928 as “Kleiner Portrait Max Hermann (mit cognac ﬂasche).” It appears to have been the ﬁ rst of the Paintings Grosz consigned to the Galerie. (Id. ¶¶ 38, 137 & Ex. 1.) One year later, Grosz consigned Self-Portrait, known then as “Das Modell,” to Flechtheim. (Id. ¶ 39 & Ex. 1.) The Complaint does not allege when Automatons might have been consigned to the Galerie.
39a Appendix D Some documents attached to the Complaint suggest that Grosz offered Flechtheim one or more of his artworks as “security” for a debt Grosz owed to the dealer. For example, a letter from Flechtheim to Grosz written in April 1934 refers to “watercolors which you sent me as security” as well as “oil pictures, which you also sent me as security.” (Id. Ex. 7.) A subsequent letter from Flechtheim’s liquidator to Grosz reminds the artist that he “still owe[s] the gallery RM 16,255.” (Id. Ex. 6.)2 Flectheim apparently went out of business at some point. The plaintiffs speculate that his liquidation was the result of Nazi coercion, but that theory is contradicted by certain documents they have attached to their Complaint, including letters between Grosz and Flechtheim. These documents suggest that Flechtheim’s liquidation was precipitated by his acute ﬁnancial troubles, going back as far as 1931, before the Nazis came to power. (See id. Ex. 3.) A letter from Flechtheim to Grosz dated April 15, 1934, explains that the dealer’s “German galleries [had] totally collapsed ﬁnancially,” that it “was only with great effort ... that [his] liquidator succeeded in preventing bankruptcy,” and that he was selling “all [his] pictures ... for the account of creditors in London” where he had spent 2 months “and hope[d] to get [his] feet on the ground.” (Id. Ex. 7.) By the time he wrote this letter to Grosz, Flechtheim’s Berlin
2. The plaintiffs dispute the validity of the debt they suggest that the Nazis coerced Flechtheim into liquidating his holdings in exchange for his safe departure from the country, the debt having been fabricated as part of the Nazi scheme. (Id. ¶ 47.) In the alterative, they argue that at least Poet “could not possibly have been transferred as an offset” against any alleged debt. (Id. ¶¶ 131, 137-38.)
40a Appendix D gallery had already been liquidated, though it was not “ofﬁcially dissolved and removed from Berlin’s commercial registry” until nearly three years later, on February 20, 1937. (Id. ¶¶ 52, 137.) Notwithstanding his ﬁnancial missteps, Flechtheim continued to consign Grosz’s works on an ad hoc basis until his death in London in 1937. (See, e.g., id. ¶¶ 16, 48, 149 & Ex. 7.) At the time of the dealer’s death, the Complaint alleges that Flechtheim had consigned Self-Portrait to Kunstzaal van Lier in Amsterdam and Automatons to the Mayor Gallery in London. (See id. ¶ 51 (Self-Portrait); id. ¶ 57 (Automatons).) The Complaint further alleges that, while Poet had been consigned from time to time— including one consignment in 1932 when it was displayed at Palais des Beaux Arts in Brussels—by 1937 the painting was back in Berlin, unconsigned. (Cf. id. ¶ 55.) B. Amsterdam Art Dealer Carel van Lier
Carel van Lier is alleged to have been a cunning Dutch art dealer who ran Kunstzaal van Lier in Amsterdam, where Self-Portrait was consigned in 1936 (and where it remained upon Flechtheim’s death the following year). (Id. ¶ 51.) In early 1938, van Lier arranged to have Automatons transferred to his Kunstzaal from the Mayor Gallery in London, where Flechtheim had consigned it in 1934. (Id. ¶¶ 16, 57.) The Complaint does not allege who authorized the transfer. Later that year, van Lier, whom the plaintiffs accuse of having “lacked any moral compass,” allegedly arranged a “sham” auction at the Mak van Waay auction house in
41a Appendix D Holland to launder artworks stolen by the Nazis. (See id. ¶ 57.) At that “auction,” van Lier purportedly purchased a collection of Grosz’s pieces that he himself had “put up for auction,” including Self-Portrait, which the plaintiffs suggest he bought at a deeply discounted price. (Id. ¶ 56 (16 guilder for Self-Portrait).) A couple of months later, he resold the piece for a handsome proﬁt to Leo Lionni, who was then the Art Director of Fortune magazine. Id.) Meanwhile, Automatons was bundled with three other watercolors and one drawing, which were collectively sold at the same auction for 25 guilders. (Id. ¶ 57.) An individual known simply as “Brant” or “Brandt” (both names appear in the Complaint) is alleged to have been the purchaser. (Id. ¶¶ 16, 57.) Brandt then sold the work to Dr. Herbert Tannenbaum in 1939 for an unknown amount, and Dr. Tannenbaum soon thereafter sold the piece to Dr. William Landman of Toronto, from whom MoMA would ultimately purchase the piece in 1946. (Id. ¶¶ 58-59.) C. Art Historian Charlotte Weidler
While van Lier was auctioning off Self-Portrait and Automatons, Charlotte Weidler is alleged to have been busy embezzling the third of the three Paintings (Poet). Weidler was a German art dealer, critic and curator for the Carnegie Institute in Pittsburgh. (Id. ¶ 74.) One month after Flechtheim’s death in April 1937, in a letter to a fellow art historian, Weidler claimed that she had “inherited” Poet from the late dealer. (Id. ¶¶ 12, 74-75 & Ex. 16.) The plaintiffs suggest that Weidler was actually an international art thief and/or Nazi agent, who wrongfully and willfully converted the painting. (Id. ¶¶ 76, 12.)
42a Appendix D In support of their theory, the plaintiffs recount the fate of the art collection of one Paul Westheim. Westheim was a modernist art collector who entrusted his portfolio to Weidler shortly before he ﬂed Berlin. (Id. ¶ 79.) The Complaint says nothing about the precise date Westheim left Germany, but it appears to have been some time in the 1920s, and in any event before the Nazis came to power in 1933, because Weidler attempted to sell Westheim’s collection to MoMA in either 1929 or 1930 (with no authorization to do so). (Id. ¶ 80 & Ex. 20.) The plaintiffs further allege that Weidler would come to New York in 1939 as a Nazi agent. (See id. ¶¶ 77-78.) The plaintiffs back their allegation with a handful of letters (all of them rank hearsay) between an assistant director of the Freer Gallery of Art in Washington, D.C., and a trustee of the Carnegie Institute, in which the two speculate that Weidler might be a Nazi—though, their suspicions, as they acknowledge, lacked a certain “logical” basis. (Id. ¶ 78 & Ex. 17.) For example, one of the letters explains: Not for one minute do I want to persuade you that Dr. Weidler is in truth what she claims to be—anti-Nazi. I, personally, have a hunch that she is not ... but there is nothing I can offer in proof. Nothing at all; but at times I am blessed with a feminine intuition and you know that often it is as certain as it is without logic. (Id. Ex. 17.) Whether or not Weidler may was an agent of the Third Reich, she did contact MoMA in 1950 in an attempt to sell
43a Appendix D Poet to the museum. (Id. ¶ 87.) Unable to persuade MoMA to purchase the piece, Weidler then contacted Alfred Flechtheim’s one-time assistant, Curt Valentin, to help her liquidate the work. (Id. ¶ 90.) In 1952, Valentin was successful in brokering a deal with MoMA for Poet, which became museum property on April 10 of that year. (Id.) The Complaint does not explain how Weidler was acquainted with Valentin, although the plaintiffs do allege that Valentin, like Weidler, was a “Nazi agent” who set up the Buchholz Gallery in New York, through which the deal with MoMA over Poet was brokered, in order “to sell Nazi-looted artworks.” (Id. ¶ 60 Heading) D. MoMA’s Director: Alfred Barr
The man who purchased Poet on MoMA’s behalf was Afred Barr, the long-time director of the museum. (Id. ¶ 90.) The plaintiff’s allege that, when Weidler approached MoMA, “Barr clearly knew that Weidler was trying to sell a stolen Grosz to him.” (Id. ¶ 88.) In support of their assertion, the plaintiffs offer three circumstantial allegations. First, they point out that thirteen years before he purchased Poet from Weidler, Barr may have purchased Nazi-looted art through Alfred Flechtheim’s former assistant, Curt Valentin. (See id. ¶¶ 65-67 & Ex. 13.) Speciﬁcally, the Complaint alleges that Barr used Valentin as his agent in 1939 to purchase ﬁve pieces (none by Grosz) at an auction in Lucerne, Switzerland—works that had been “part of a monstrous Nazi seizure of all modern
44a Appendix D works from German museums and private owners during the previous year.” (Id. Ex. 14.) Second, the Complaint alleges that MoMA never contacted the artist to sign or restore the painting, even though the museum knew that Grosz lived in New York. (Id. ¶ 91.) Third, the Complaint argues that neither Barr nor anyone else at MoMA did any research into the painting’s ownership or provenance before its purchase, intimating that Barr sought actively to avoid being confronted with what he knew to be the painting’s tainted history. (Id.) In their response to defendants’ motion to dismiss, plaintiffs disavow any suggestion that these allegations are intended to allege that MoMA purchased the painting in bad faith. Stating that “the words ‘bad faith’ do not appear in the Complaint” (and indeed those precise words do not appear in the pleading), they contend that the Complaint alleges “only that MoMA was on notice of facts warranting investigation because it knew the Paintings had been held on consignment by Flechtheim, a Jew persecuted by the Nazis.” (Pls. Mem. of Law in Opp. to Mot. to Dismiss (“MTD Opp.”), June 25, 2009, at 15-16 (citation omitted).) The reason for this wholly unconvincing change of position will become apparent when the Court discusses the peculiarities statute of limitations relating to conversion and how that affects the timeliness of plaintiffs’ claim to Poet. See infra Part IV.
45a Appendix D E. Grosz Sees Poet in MoMA But Does Not Try to Reclaim the Painting The artist himself saw Poet on display at the museum in 1953, barely a year after Barr had purchased it from Weidler. At that time, the Grosz wrote to his brother-inlaw: “Modern Museum exhibits a painting stolen from me (I am powerless against that) they bought it from someone, who stole it.” (Compl. ¶ 105.) In a second letter dated January 9, 1953, Grosz wrote: ‘Modern Museum bought a painting that was stolen from me... (one cannot do anything) old affair.’ (Id.) Sadly, the artist would die six and a half years later, on July 6, 1959; during those six and one half years he never contacted anyone at MoMA to seek restitution of the painting. F. The Instant Action
On November 24, 2003, forty-four years after Grosz’s death, Ralph Jentsch, “managing director of the George Grosz Estate and author of [the artist’s] catalogue raisonne,” ﬁ nally asked MoMA to return Poet to the estate—along with Self-Portrait and Automatons, which he also thought had been wrongfully taken from Grosz during his lifetime. (Id. ¶ 117 & Ex. 26.) Plaintiffs assert that this demand was not refused MoMA until the museum sent them a letter on April 12, 2006. (MTD Opp. at 9.) They ﬁ led their Complaint, which included, inter alia, claims for conversion, replevin, declaratory judgment and “constructive trust” on April 10, 2009—almost three years to the day after the letter on which plaintiffs rely. (Id. ¶¶ 149-174 (claims).)
46a Appendix D On June 4, 2009, defendants moved to dismiss the Complaint as time barred, under a variety of theories. IV. The Statute of Limitations New York Civil Practice Law and Rules (“CPLR”) provides that “an action to recover a chattel or damages for the taking or detaining of a chattel [replevin or conversion] ... must be commenced within three years,” CPLR § 214(3), computed from “the time the cause of action accrued to the time the claim is interposed,” CPLR § 203(a). While a claim for declaratory judgment without a prescribed limitations period usually enjoys a six-year limitations period under CPLR 213(1), in cases like this where a claim “could have been made in a form other than an action for a declaratory judgment [i.e., an action for conversion or replevin] and the limitations period for an action in that form has already expired, the time for asserting the claim cannot be extended through the simple expedient of denominating the action one for declaratory relief.” New York City Health & Hospitals Corp. v. McBarnette, 84 N.Y.2d 194, 201 (1994). Finally, it is settled law that where, as here, both “a legal and an equitable remedy exists as to the same subject-matter, the latter is under the control of the same statutory bar as the former.” Keys v. Leopold, 241 N.Y. 189, 189 (1925) (action for accounting and breach of contract); accord Norris v. Grosvenor Mktg Ltd., 803 F.2d 1281 (2d Cir. 1986). Accordingly, the three year statute of limitations for conversion and replevin (CPLR § 214(3)) applies to all of the plaintiffs’ claims. The question before this Court is when that three years began to run.
47a Appendix D A. Accrual: New York’s Demand and Refusal Rule
Under New York law, the statute of limitations for conversion and replevin automatically begins to run against a bad faith possessor on the date of the theft or bad faith acquisition—even if the true owner is unaware the chattel is missing. Close-Barzin v. Christie’s, Inc., 51 A.D.3d 444, 444 (N.Y. App. Div. 1st Dep’t 2008). By contrast, “An innocent purchaser of stolen goods becomes a wrongdoer only after refusing the owner’s demand for their return.” Kunstsammlungen Zu Weimar v. Elicofon, 678 F.2d 1150, 1161 (2d Cir. 1982) (citing cases, emphasis added). Therefore, a cause of action accrues against a bona ﬁde purchaser when the purchaser refuses to return the property in question. Id. Dubbed the “demand-andrefusal rule,” this axiom of New York law dates back to 1966, when the New York County Supreme Court became the ﬁ rst court in the country to address the statute of limitations issue in the context of an action to recover a stolen painting. See Menzel v. List, 49 Misc. 2d 300 (N.Y. Sup. Ct. 1966). The plaintiff in Menzel sought to recover a piece by Marc Chagall that she and her late husband had been forced to leave behind when they ﬂed Belgium after the Nazis occupied that country. Id. at 302. Shortly after their departure, the Nazis declared the piece to be “decadent Jewish art” and seized it for “safekeeping.” Id. at 301. The piece resurfaced in Paris in 1955, when a New York art dealer purchased it and then promptly resold it. Id. at 303. The plaintiff had been diligently searching for the work since the end of the war, but was unable to locate it until 1962. When the purchaser refused to return the painting, she ﬁ led suit. Id. at 301.
48a Appendix D At trial, the defendant established that he was an innocent purchaser who had no notice that the painting had been stolen. He pleaded the statute of limitations as a defense, based on either (1) the lapse of time since 1941, when the plaintiff had ﬁ rst been divested of custody, or in the alternative, (2) the lapse of time since 1955, when he purchased the piece. The court disagreed with his argument, holding instead that a cause of action for conversion or replevin accrues “against a person who lawfully comes by a chattel arises, not upon the stealing or the taking, but upon the defendant’s refusal to convey the chattel upon demand.” Id. at 304 (citing Cohen v. M. Keizer, Inc., 246 App. Div. 277 (1st Dep’t 1936); Gillet v. Roberts, 57 N.Y. 28 (1874)). The court reasoned that until a demand is made and refused, an innocent purchaser’s possession is neither wrongful nor unlawful. He should be “informed of the defect in his title and have an opportunity to deliver the property to the true owner, before he shall be made liable as a tortfeasor for a wrongful conversion.” Gillet, 57 N.Y. at 34 (alterations omitted). Thus, the court concluded, Menzel was entitled to replevy her painting. B. Unreasonable Delay
Under the demand-and-refusal rule as set forth in Menzel, it appears that a person who knows where a missing item is could delay the accrual of an action against a good faith purchaser indeﬁnitely simply by failing to make a demand. It is undisputed that Grosz knew where at least one of the works—Poet—was a half century before plaintiffs demanded its return. But Grosz never demanded
49a Appendix D the return of the work. Since plaintiffs have no more right to Poet than Grosz would have had if he were still alive, MoMA argues that Grosz’s unreasonable delay caused the statute to begin running shortly after he encountered the work in 1953. Whether unreasonable delay starts the statute running remains an open question under New York law. Clearly, a party cannot delay making demand indeﬁnitely. However, one judge in this district has concluded that the issue of “unreasonable delay” is relevant only to laches, not to accrual of the action. See Republic of Turkey v. Metropolitan Museum of Art, 762 F. Supp. 44, 46 (S.D.N.Y. 1990). Republic of Turkey involved artifacts that were excavated from burial mounds in the Ushak region of Turkey, exported to the United States in contravention of Turkish law, and eventually purchased by the Metropolitan Museum of Art. Id. at 45. In that case, the Turkish government (plaintiff) was alleged to have had “actual knowledge of the facts needed to make a demand” more than a decade and a half before it ﬁ led its action. Id. at 46. In denying the defendant’s motion to dismiss the action as time barred, the court held that the reasonableness of the plaintiffs’ delay in ﬁ ling suit did not bear on the statute of limitations but was properly raised only in the context of laches. Id. at 46 -47. This Court agrees with the reasoning of Republic of Turkey, and holds that the issue of unreasonable delay is relevant only to the defense of laches—even where, as here, it is undisputed that a potential plaintiff (Grosz) had
50a Appendix D actual knowledge of the whereabouts of at least one of the missing art works (Poet) a half century before anyone tried to replevy the piece. In light of the fact-sensitive nature of a laches inquiry, it would be premature to resolve the question now – especially as it is unnecessary to reach the issue, because plaintiffs’ suit is plainly time barred. C. Plaintiffs’ Demand and MoMA’s Refusal
For purposes of deciding this motion, I will assume arguendo that the position taken by plaintiffs in their opposition papers—namely, that the Complaint does not allege that any of the works were purchased by the museum with knowledge that they had been stolen—is true. 3 On that assumption, the demand and refusal rule governs when the statute of limitations began to run, and plaintiffs’ claims against the museum accrued on the date MoMA rejected plaintiffs’ November 24, 2003 demand.4
3. This assumption contradicts certain allegations in the complaint—notably that “Barr clearly knew that Weidler was trying to sell a stolen Grosz to him” when he purchased Poet (Compl. ¶ 88)—but since plaintiffs could amend their Complaint to remove those assertions (which admit only of the conclusion that MoMA was not a bona ﬁde purchaser without notice), I will decide the motion as though the Complaint alleged that the museum took title to all three works in good faith. 4. If (as is actually alleged in the Complaint) MoMA took title to Poet in bad faith, then absent any tolling of that limitations period (and there is no basis to toll the statute, see infra Part V), plaintiffs’ claims to Poet have been time barred since I956—three years after they allege that the museum knowingly acquired wrongful ownership. See Close-Barzin v. Christie’s, Inc., 51 A.D.3d 444 (N.Y. App. Div. 1st Dep’t 2008).
51a Appendix D All parties agree that MoMA has in fact rejected plaintiffs’ demand and refused to return the Paintings. They differ only on the date when rejection occurred. Though there is little case law addressing what constitutes a “refusal” for purposes of the statute of limitations, the cases that exist hold that, “A refusal need not use the speciﬁc word ‘refuse’ so long as it clearly conveys an intent to interfere with the demander’s possession or use of his property.” Feld v. Feld, 279 A.D.2d 393, 395 (N.Y. App. Div. 1st Dep’t 2001) (citation omitted, emphasis added); see also Spanierman Gallery v. Merritt, No. 00 Civ. 5712, 2004 WL 1781006, at *5 (S.D.N.Y. Aug. 10, 2004) (citing Feld). In Feld, a letter in response to a demand conditioned the return of disputed property on the resolution of other disputes between the parties. The plaintiff insisted that the letter was not sufﬁciently deﬁnite to constitute “refusal” of his demand; not only did it not use the word “refuse,” but it even indicated that there were circumstances under which the property might be returned at some unspeciﬁed moment in the future. But the First Department disagreed with this argument. Because the sender retained the disputed property and indicated that he would not return it unless his demands were met, his conduct was inconsistent with a plaintiff s claim of ownership, and so constituted a “refusal,” thus causing plaintiffs cause of action to accrue. Feld, 279 A.D.2d at 395. In Borumand v. Assar, No. 01 Civ. 6258, 2005 WL 741786 (W.D.N.Y. Mar. 31, 2005), a federal court in New York took the Feld doctrine one step further, holding that
52a Appendix D refusal need not be conveyed in words at all. Rather, the court explained, “Actions may be sufﬁcient to constitute a refusal if they amount to ‘an overt and positive act of conversion.’” Id. at *14 (citation omitted). In Borumand, the defendant “never explicitly informed [plaintiff] that he would not relinquish possession [but] he never in fact turned over the [chattels] and [instead] continually maintained that he would do so at some future time.” Id. The court ultimately held that the plaintiff’s claim accrued one year after her initial demand, since by that time, she should have “reasonably concluded” that the defendant’s actions in putting her off amounted to a refusal. Id. In line with Feld and Borumand, a court must analyze the actions as well as his words of a person who receives a demand before deciding whether and when it was refused. If either the recipient’s words or actions evidences “an intent to interfere with the demander’s possession or use of his property,” see Feld, 279 A.D.2d at 395—which is an “overt and positive act of conversion,” see Borumand, 2005 WL 741786, at *14—then the demand has been refused and the cause of action accrues, even if the words “I refuse your demand” were not explicitly used. This conclusion comports with the purpose behind the demandand-refusal rule, which is to give an innocent purchaser the opportunity to turn over chattel in his possession after learning that it had been stolen from someone else. Nothing in the rule’s history or purpose suggests that a party who receives a demand, and who thereafter acts in a manner that is inconsistent with the demander’s claim to ownership, should be held not to have “refused” the demand simply because he failed to recite some magic
53a Appendix D words of rejection. Actions, as we all know, can sometimes speak louder than words. With this in mind, we examine the dealings between the Grosz Estate and MoMA in the months and years after the demand was made, which occurred in a November 24, 2003 letter from Ralph Jentsch (acting on behalf of the Grosz estate) to MoMA’s Director, Glenn Lowry. (See Compl. ¶ 117 & Ex. 26.)5 In the twenty-nine months following receipt of that letter, MoMA took a number of actions with respect to the Paintings. It engaged researchers from Yale to look into the Paintings’ provenance, met periodically with representatives of the Grosz Estate, and engaged in sporadic correspondence with Jentsch. In January 2006, the museum’s Board retained former Attorney General Nicholas de B. Katzenbach to review the work that had been done and to prepare a report and recommendation for the Board. At all times while this activity was going on, MoMA retained custody of the artworks. MoMA argues that it clearly communicated its refusal to return the Paintings in one of its letters to Jentsch—the one dated July 20, 2005—and asks the Court to dismiss this action because plaintiffs’ claims had to have accrued no later than that date. (See MoMA MTD at 18.) Plaintiffs argue that the museum did not reject its demand until April 12, 2006 (MTD Opp. at 9), when
5. For purposes of the demand and refusal rule, everyone agrees that this letter is the demand.
54a Appendix D MoMA sent a letter notifying plaintiff that its Board of Trustees had voted to accept Katzenbach’s conclusion that the museum had no obligation to return, and should not return, Poet and Self-Portrait.6 (See Solomon Decl. Ex. E (Katzenbach report).) I conclude that defendant has the better of this argument. If MoMA’s failure to return the Paintings for more than a year and a half after plaintiffs demanded them did not constitute a refusal as a matter of law (and this Court thinks that it did), then the July 20, 2005 letter—in which the defendant clearly communicated its intent to keep all three works despite plaintiffs’ demand—was an act utterly inconsistent with plaintiffs’ claim of right. It thus constituted the sort of refusal contemplated by the demand and refusal rule. MoMA’s Director, Glenn Lowry, began his July 20 letter to Ralph Jentsch as follows: “I enjoyed our recent meeting and continue to appreciate the frank and open dialogue that we have created together in order to deal with the Grosz estate’s questions concerning the [Paintings] at the Museum of Modern Art that are under discussion.” (Solomon Decl. Ex. A at 1.) But Lowry expressed “concern” about what he believed to be a misunderstanding by Jentsch. Speciﬁcally, he wrote:
6. Automatons was not mentioned in the Katzenbach report. In fact, the work is mentioned only in the November 24, 2003 demand letter and in Lowry’s July 20, 2005 letter to Jentsch. After that, all mention of Automatons ceases. The parties have not explained why, and in view of the Court’s conclusion the reason is irrelevant.
55a Appendix D I am concerned that we may have a different interpretation over some of what has been said in the last two years about these works and I want to clarify our position in order to avoid—given the importance of the issues under consideration—any confusion. We have, as you know, a ﬁduciary obligation to our collection. Before we remove a work from the Museum’s collection, we need to establish convincing and conclusive evidence that another party—in this instance, the Estate of George Grosz—has ownership rights superior to the Museum’s.... For this reason, I think it is critical to state that I never said—nor could I have said—that MoMA would restitute the Grosz works if no documents could be found contradicting the documentation for your initial restitution claim. (Id.) Lowry explained the museum’s position on Poet: I think it is fair to say that we have now reached a point where it appears that no more information is currently available for us to consider, a point on which I sense, we both agree. We have, however, reached somewhat different conclusions about the results of our extensive study of the provenance of [Poet]: we believe that the available evidence does not lead to any deﬁnitive conclusion that challenges the Museum’s ownership of the picture. In
56a Appendix D fact, much of what we know argues in favor of MoMA’s clear title. (Id. (emphasis added).) With respect to the other two Paintings (Self-Portrait and Automatons), Lowry stated: “Although we are aware of the restitution of a painting with similar provenance [to Self-Portrait], based on the material that you have shared with us, and on our own extensive research—much of which we have done in collaboration with Yale University—we cannot reach the conclusion that restitution of either this picture [Self-Portrait], or of the drawing, Republican Automaton, would be appropriate at this time.” (Solomon Decl. Ex. A at 2) (emphasis added). Lowry’s statements, especially the highlighted portions thereof, plainly indicate that, as of July 20, 2005, MoMA rejected plaintiffs’ assertion that they had an immediate right to possession of the three Grosz works. Lowry plainly asserts that MoMA has superior title to Poet, and stated that it “could not conclude” that plaintiffs were entitled to possession of either Self-Portrait or Automaton. And he stated that the museum intended to keep all three paintings (at least “at this time”)—which it did. Lowry’s July 20, 2005 letter, coupled with the museum’s continued retention of the works after it was sent, indicates its continuing intent to interfere with the rights asserted by plaintiffs in their demand. This is all the “refusal” the law could possibly require before plaintiffs’ causes of action for conversion and replevin (as
57a Appendix D well as the corresponding equitable claims) accrued. After reading the July 20 letter, no reasonable person could have concluded that MoMA agreed with plaintiffs’ assertion that they were the rightful owners of the Paintings, and as such were entitled to immediate possession of them. The only conceivable reading of the letter is that MoMA emphatically disagreed with plaintiff ’s position—a reading that is supported by its continued retention of the purportedly purloined Paintings, which, as the Borumand court ruled, is an “overt and positive act of conversion.” See Borumand, 2005 WL 741786, at *14. Therefore, this Court holds that plaintiffs’ claims accrued, and the limitations period began to run, on July 20, 2005. Underscoring this conclusion is the fact that the parties had previously agreed that MoMA would respond to plaintiffs’ demand no later than March 2005 (Solomon Decl., Ex. D at 1-2). By the time the July 20, 2005 letter was sent, the museum had already kept the Paintings for three months beyond the date it set for answering the demand—which is itself an “overt and positive act of conversion.” Plaintiffs dispute the conclusion that MoMA had refused their claims on July 20, 2005. They insist that MoMA’s July 20 letter does not constitute a sufﬁciently clear rejection of their claim. They base this argument on Lowry’s use of temporizing language elsewhere in his letter. Speciﬁcally, with respect to Poet, he said: In the spirit of friendship and recognition of the limitations on the present state of our knowledge about the provenance of the work, I
58a Appendix D suggested the possibility of shared ownership of [Poet] at our May 31 meeting. I did this not out of a conviction that the picture was tainted in some way, but because shared ownership would be a gracious, amicable means of addressing the fact that we may never be able to understand fully the work’s history in the decades before the Museum purchased it in 1952. .... I proposed five or ten year benchmarks as opportunities for MoMA and the Grosz Foundation to review their positions and to consider any new information that might come to light. If further research produced conclusive facts, one way or another, either the Foundation or MoMA could withdraw its ownership claims. If no new or conclusive evidence comes to light, the shared arrangement could continue, more or less in perpetuity. (Id. at 2.) Plaintiffs also note that Lowry invited Grosz family to meet with museum representatives sometime in the “early fall” “to review the facts and determine an appropriate course of action.... to best serve[ ] the needs of George Grosz.” (Id.) Insofar as plaintiffs interpret these statements as having somehow tempered the museum’s clearly stated refusal to return the artworks “at this time,” as well as its ﬂat-out rejection of plaintiffs’ claims to ownership of Poet, their interpretation is misguided. Lowry’s temporizing language was almost certainly designed to entice plaintiffs to continue negotiating and to prevent the dispute from
59a Appendix D becoming public or escalating into litigation. And indeed, throughout the parties’ dealings, MoMA indicated a willingness to resume looking into the matter anew if new evidence surfaced—as any responsible museum would. (See Solomon Decl. Ex. A at 2 (July 20, 2005 letter from G. Lowry to R. Jentsch); id. Ex. E at 1 (April 12, 2006 letter from G. Lowry to R. Jentsch).) However, nothing Lowry said contradicts his clearly stated rejection of plaintiffs’ demand that the three Paintings be returned to them, the “rightful” owners. The fact that additional research or evidence might someday cause MoMA to alter the conclusions it had obviously reached by July of 2005 is irrelevant to whether plaintiffs’ causes of action accrued. Plaintiffs made a demand for return of the works in November 2003. At some point MoMA had to return the Paintings in order to avoid converting them. In the July 20, 2005 letter, it expressly refused to do so. The museum’s suggestions about “shared ownership” of Poet pending “further research,” and future meetings to “review the facts,” suggest that perhaps MoMA might one day be open to giving plaintiffs one or more of the works—but that is no different from the Feld defendant’s assertion that he would return the stolen property if the parties could resolve their other disputes. The museum’s actions and its statements were inconsistent with the demander’s claim to ownership of the works. In sum, MoMA had reached a conclusion after nearly two years of research; its conclusion was inconsistent with plaintiffs’ claim of ownership; Lowry, acting on behalf of MoMA, communicated that conclusion to plaintiffs; and the museum kept the Paintings after Lowry sent that
60a Appendix D message. From and after that moment when Lowry sent the July 20, 2005 letter, plaintiffs were on notice that their demand (which was for immediate possession of the works) had been refused. At that point, their rights of action were fully ripe, and the three year limitations period began to run. Plaintiffs’ contend, in conclusory fashion, that they relied on Lowry’s temporizing language to forbear from bringing suit. But two letters written by Jentsch in January 2006—more than three years prior to the commencement of suit on April 12, 2009 —make it clear beyond peradventure that Jentsch understood that plaintiffs’ demand had been refused. (See Solomon Decl. Exs. C & D.) In the ﬁ rst letter, dated January 5, 2006, Jentsch sought to “memorialize the substance” of a meeting he had previously had with Lowry. According to Jentsch, the purpose of that meeting was “to clarify once and for all MoMA’s position with regard to the restitution to the Grosz Estate of two works [Poet and Self-Portrait] by George Grosz.” (Id. Ex. C at 1.) Jentsch wrote: “I presented to you [Lowry] a letter authorized by the George Grosz heirs demanding return of the two works by February 3, 2006. You rejected the demand and advised that the works would not be returned by this date or any date.” (Id. (emphasis added).)7
7. Whatever was said at the referenced meeting to cause Jentsch to write the January 5, 2006 letter, Lowry absolutely refused to countenance plaintiffs’ demand for the return of the Paintings by February 3, 2006—which he called their “ultimatum.”
61a Appendix D The second letter, dated January 20, 2006 (see Solomon Decl. Ex. D.), is even more compelling evidence that plaintiffs (through their representative) well knew that MoMA had rejected their original demand the summer before. Jentsch not only reiterated his understanding that MoMA was not going to return the Paintings, but acknowledged that MoMA had “outright declined restitution” of the works in Lowry’s “letter to me, July 20, 2005.” (Id. at 2 (emphasis added, errors in original).) Jentsch went on to say, “I responded to you in a letter August 11, 2005, and asked you the question on what basis MoMA would deny restitution of the oil ‘Maler und Modell’ [Self-Portrait]....” (Id. (emphasis added).) Jentsch’s statements in this second letter fully support the court’s conclusion that the statute began to run no later than July 20, 2005. Plaintiffs’ claims to all three Paintings are thus time barred under the demand and refusal rule.
In a letter dated January 18, 2006, Lowry wrote: “the Museum of Modern Art has determined not to respond to your ultimatum.” (Dowd Decl. Ex. 1 at 2). As the Paintings were obviously not conveyed to plaintiffs by February 3, 2006 deadline Jentsch imposed, it is obvious that this later demand, too, was explicitly rejected by the museum well before April 12, 2006—in any event, no later than February 3, 2006, when the Paintings stayed where they were. If we were to ignore everything that went before, and accept February 3, 2006, as the date of the museum’s refusal (of plaintiffs’ demand that the Paintings be returned by that date), this lawsuit was still ﬁ led more than two months too late. However, that is not the conclusion the Court has reached.
62a Appendix D V. Equitable Tolling Anticipating a ﬁ nding that their claims are stale, plaintiffs suggest that this Court apply the doctrine of equitable tolling to suspend the statute of limitations for the period of “compromise negotiations from 2003 to April 12, 2006.” (MTD Opp. at 12.) In support of their argument, plaintiffs cite two cases: Smith v. McGinnis, 208 F.3d 13 (2d Cir. 2000), and Lord Day & Lord v. Socialist Republic of Vietnam, 134 F. Supp. 2d 549 (S.D.N.Y.2001). In neither of these cases did the court conclude that the limitations period should be equitably tolled, and in any event both are factually inapposite. Insofar as they are at all relevant, these cases establish that equitable tolling “applies only in the ‘rare and exceptional circumstance,’” and is appropriately invoked only where a plaintiff has “acted with reasonable diligence throughout the period he seeks to toll.” Smith, 208 F.3d at 17 (citations and alterations omitted). In other words, the plaintiff must show that he has been ‘prevented in some extraordinary way from exercising his rights.’ Id. (internal quotations omitted). This case does not present one of the “rare and exceptional circumstances” in which any tolling of the limitations period would be equitable. Although plaintiffs contend that the entire two and one half year period of negotiations ought to be excluded from the limitations period, they do not explain why this should be so. Instead, plaintiffs argue as follows: “On January 18, 2006, Lowry wrote to the [plaintiffs] telling them to wait and assuring them that MoMA had not refused their claims until the Board considered the Katzenbach report and made their decision. Lowry’s January 18, 2006
63a Appendix D letter equitably tolls the statute of limitations because the [plaintiffs] reasonably relied on it.” (MTD Opp. at 12.) It thus appears that plaintiffs are contending that the museum’s decision to involve the Board in the matter, and the Board’s retention of Katzenbach to review the situation, is the basis for an equitable toll, because it somehow led plaintiffs to believe that MoMA had not yet refused their demand. This argument is utterly unpersuasive. First of all, in the January 18 letter to which plaintiffs refer, Lowry did not disavow MoMA’s determination to keep the Grosz works in its collection in derogation of plaintiffs’ purported rights. On the contrary, he emphasized that the museum—although willing to return works of art in the face of legitimate claims—had no reason to question its conclusion that plaintiffs’ claims were unfounded: The Museum of Modern Art has demonstrated that it is willing to engage in serious, scholarly provenance research on works in its collection. We have further demonstrated that, where the facts support it, we are willing and able to conclude that a claim is legitimate and that someone else has an ownership right superior to the Museum’s .... No such compelling facts exist in this instance. (Dowd Decl. Ex. 1 at 2, emphasis added.) Lowry indicated that the museum’s Board had decided to retain Katzenbach “notwithstanding that” (i.e., notwithstanding the fact that
64a Appendix D there was no compelling evidence to support plaintiffs’ claims), but he plainly stated: We take this extraordinary step [of asking Katzenbach to review the matter] not out of any sense of uncertainty about our conclusions, or any wavering in our resolve, but rather to obtain an intelligent, candid, independent assessment of the situation. (Id.) The January 18 letter underscores, rather than undermines, the museum’s previously-stated belief that it had superior rights in the works in suit. It suggests no “sense of uncertainty about our conclusions” and no “wavering in our resolve.” If I may paraphrase, the January 18 letter says, “We still think we were right—in fact, we have no reason at all to think we were wrong— back on July 20, when we told you we would not give you the Paintings. But because we are the Museum of Modern Art, we are going to ask an outsider to look at the matter yet again.” In the context of everything that had gone before, Lowry’s statements on January 19, 2006, gave plaintiffs no reasonable basis to conclude that MoMA’s July 20, 2005 letter did not constitute a rejection of their original demand—as Jentsch himself recognized in a letter sent to Lowry only two days later. Furthermore, there is a logical ﬂ aw in plaintiffs’ argument that the statute ought to be equitably tolled for the entire twenty-nine month period of its interaction with MoMA. Katzenbach’s retention did not and could not alter
65a Appendix D or undo the fact that the museum had refused plaintiffs’ demand some six months earlier. Put otherwise, the Board’s action did not cause a claim that had accrued 182 days earlier to “unaccrue” and restart the limitations clock at Day One. At best, what plaintiffs can argue is that the Board’s decision to commission a report from Katzenbach tolled (suspended) the running of the statute during the period while he did his work—i.e., from January 18 until April 12, 2006—a period of 84 days. Adding 84 days to the limitations period moves the date by which suit had to be brought from July 20, 2008, to October 13, 2008—which is not enough to save plaintiffs’ Complaint from dismissal. Finally, plaintiffs have not established that the circumstances surrounding their lengthy period of inaction “adversely affected [their] capacity to function generally or in relationship to the pursuit of [their] rights.” Pena v. Potter, 326 Fed. App’x 33, 35 (2d Cir. 2009) (citation omitted). The Second Circuit has explained that a plaintiff must do more than declare that equitable tolling is appropriate in order to establish his right to such relief. See Boos v. Runyon, 201 F.3d 178 (2d Cir. 2000) (single sentence alleging mental illness insufﬁcient). But in this case, that is all plaintiffs have done. Nothing in Lowry’s January 18, 2006 letter or in the Board’s retention of Katzenbach prevented the plaintiffs from bringing suit during the period when Katzenbach was reviewing the matter or at any time thereafter. Indeed, by January 18, 2006, litigation was clearly warranted—more than two years had passed since plaintiffs had made their original demand, MoMA still had not returned the Paintings, and it had repeatedly indicated that it would not do so.
66a Appendix D Accordingly, this Court declines to apply equitable tolling to suspend the running of the limitations period for the period November 2003 until April 12, 2006. CONCLUSION The defendant’s motion to dismiss is granted. The Clerk of the Court is instructed to remove the motion to dismiss (Docket No. 13) from the Court’s outstanding motion list, and to enter judgment for defendant dismissing the case. In view of the disposition of the motion, the pending Objection to the Magistrate Judge’s ruling on a discovery dispute (Docket No. 55) is moot. This constitutes the decision and order of this Court. Dated: January 6, 2010 BY ECF TO ALL COUNSEL /s/ U.S.D.J.
67a Appendix E APPENDIX E — ORDER DENYING PETITION FOR REHEARING OF THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, FILED FEBRUARY 9, 2011 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT At a stated Term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on the 9th day of February, two thousand eleven, ORDER Docket Number: 10-257 Martin Grosz, Lilian Grosz, Plaintiff - Appellant, v. The Museum of Modern Art, Herrmann-Neisse with Cognac, Painting by Grosz, Self-Portrait With Model, Painting by Grosz, Republican Automatons, painting by Grosz, Defendant - Appellee. Appellants Martin Grosz and Lilian Grosz file a petition for rehearing, or, in the alternative, for rehearing
68a Appendix E en banc. The panel that determined the appeal has considered the request for panel rehearing, and the active members of the Court have considered the request for rehearing en banc. IT IS HEREBY ORDERED that the petition is denied. For the Court: Catherine O’Hagan Wolfe, Clerk /s/
69a Appendix F APPENDIX F — WASHINGTON PRINCIPLES ON HOLOCAUST-ERA ASSETS, DATED DECEMBER 3, 1998 Washington Principles on Holocaust-Era Assets (December 3, 1998) http://www.state.gov/www/regions/eur/holocaust/ heacappen.ndf On December 3, 1998, 44 governments participating in the Washington Conference on Holocaust-Era Assets endorsed the following principles for dealing with Nazilooted art. In developing a consensus on non-binding principles to assist in resolving issues relating to Nazi-conﬁ scated art, the Conference recognizes that among participating nations there are differing legal systems and that countries act within the context of their own laws. 1. Art that had been conﬁscated by the Nazis and not subsequently restituted should be identiﬁed. 2. Relevant records and archives should be open and accessible to researchers, in accordance with the guidelines of the International Council on Archives. 3. Resources and personnel should be made available to facilitate the identification of all art that had been conﬁscated by the Nazis and not subsequently restituted.
70a Appendix F 4. In establishing that a work of art had been conﬁscated by the Nazis and not subsequently restituted, consideration should be given to unavoidable gaps or ambiguities in the provenance in light of the passage of time and the circumstances of the Holocaust era. 5. Every effort should be made to publicize art that is found to have been conﬁscated by the Nazis and not subsequently restituted in order to locate its pre-War owners or their heirs. 6. Efforts should be made to establish a central registry of such information. 7. Pre-War owners and their heirs should be encouraged to come forward and make known their claims to art that was conﬁscated by the Nazis and not subsequently restituted. 8. If the pre-War owners of art that is found to have been conﬁscated by the Nazis and not subsequently restituted, or their heirs, can be identiﬁed, steps should be taken expeditiously to achieve a just and fair solution, recognizing this may vary according to the facts and circumstances surrounding a speciﬁc case. 9. If the pre-War owners of art that is found to have been conﬁscated by the Nazis, or their heirs, cannot be identiﬁed, steps should be taken expeditiously to achieve a just and fair solution.
71a Appendix F 10. Commissions or other bodies established to identify art that was conﬁscated by the Nazis and to assist in addressing ownership issues should have a balanced membership. 11. Nations are encouraged to develop national processes to implement these principles, particularly as they relate to alternative dispute resolution mechanisms for resolving ownership issues.
72a Appendix G APPENDIX G — PRAGUE HOLOCAUST ERA ASSETS CONFERENCE: TEREZÍN DECLARATION, DATED JUNE 30, 2009 Prague Holocaust Era Assets Conference: Terezín Declaration Upon the invitation of the Prime Minister of the Czech Republic we the representatives of 46 states listed below met this day, June 30, 2009 in Terezín, where thousands of European Jews and other victims of Nazi persecution died or were sent to death camps during World War II. We participated in the Prague Holocaust Era Assets Conference organized by the Czech Republic and its partners in Prague and Terezín from 26-30 June 2009, discussed together with experts and non-governmental organization (NGO) representatives important issues such as Welfare of Holocaust (Shoah) Survivors and other Victims of Nazi Persecution, Immovable Property, Jewish Cemeteries and Burial Sites, Nazi- Conﬁscated and Looted Art, Judaica and Jewish Cultural Property, Archival Materials, and Education, Remembrance, Research and Memorial Sites. We join afﬁ rming in this Terezín Declaration on Holocaust Era Assets and Related Issues - Aware that Holocaust (Shoah) survivors and other victims of Nazi persecution have reached an advanced age and that it is imperative to respect their personal dignity and to deal with their social welfare needs, as an issue of utmost urgency,
73a Appendix G - Having in mind the need to enshrine for the beneﬁt of future generations and to remember forever the unique history and the legacy of the Holocaust (Shoah), which exterminated three fourths of European Jewry, including its premeditated nature as well as other Nazi crimes, - Noting the tangible achievements of the 1997 London Nazi Gold Conference, and the 1998 Washing ton Conference on Holocaust-Era Assets, which addressed central issues relating to restitution and successfully set the stage for the signiﬁcant advances of the next decade, as well as noting the January 2000 Stockholm Declaration, the October 2000 Vilnius Conference on Holocaust Era Looted Cultural Assets, - Recognizing that despite those achievements there remain substantial issues to be addressed, because only a part of the conﬁscated property has been recovered or compensated, - Taking note of the deliberations of the Working Groups and the Special Session on Social Welfare of Holocaust Survivors and their points of view and opinions which surveyed and addressed issues relating to the Social Welfare of Holocaust Survivors and other Victims of Nazi Persecution, Immovable Property, Nazi Conﬁscated Art, Judaica and Jewish Cultural Property, Holocaust Education, Remembrance and Research, which can be found on the weblink for the Prague Conference and will be published in the Conference Proceedings,
74a Appendix G - Keeping in mind the legally non-binding nature of this Declaration and moral responsibilities thereof, and without prejudice to applicable international law and obligations, 1. Recognizing that Holocaust (Shoah) survivors and other victims of the Nazi regime and its collaborators suffered unprecedented physical and emotional trauma during their ordeal, the Participating States take note of the special social and medical needs of all survivors and strongly support both public and private efforts in their respective states to enable them to live in dignity with the necessary basic care that it implies. 2. Noting the importance of restituting communal and individual immovable property that belonged to the victims of the Holocaust (Shoah) and other victims of Nazi persecution, the Participating States urge that every effort be made to rectify the consequences of wrongful property seizures, such as conﬁscations, forced sales and sales under duress of property, which were part of the persecution of these innocent people and groups, the vast majority of whom died heirless. 3. Recognizing the progress that has been made in research, identification, and restitution of cultural property by governmental and non-governmental institutions in some states since the 1998 Washington Conference on Holocaust-Era Assets and the endorsement of the Washington Conference Principles on NaziConﬁscated Art, the Participating States afﬁrm an urgent need to strengthen and sustain these efforts in order to ensure just and fair solutions regarding cultural property,
75a Appendix G including Judaica that was looted or displaced during or as a result of the Holocaust (Shoah). 4. Taking into account the essential role of national gover n ment s, t he Holocaust (Shoa h) su r v ivors’ organi zations, and other speciali zed NGOs, the Participating States call for a coherent and more effective approach by States and the international community to ensure the fullest possible, relevant archival access with due respect to national legislation. We also encourage States and the international community to establish and support research and education programs about the Holocaust (Shoah) and other Nazi crimes, ceremonies of remembrance and commemoration, and the preservation of memorials in former concentration camps, cemeteries and mass graves, as well as of other sites of memory. 5. Recognizing the rise of Anti-Semitism and Holocaust (Shoah) denial, the Participating States call on the international community to be stronger in monitoring and responding to such incidents and to develop measures to combat anti-Semitism. The Welfare of Holocaust (Shoah) Survivors and other Victims of Nazi Persecution Recognizing that Holocaust (Shoah) survivors and other victims of Nazi persecution, including those who experienced the horrors of the Holocaust (Shoah) as small and helpless children, suffered unprecedented physical and emotional trauma during their ordeal.
76a Appendix G Mindful that scientific studies document that these experiences frequently result in heightened damage to health, particularly in old age, we place great priority on dealing with their social welfare needs in their lifetimes. It is unacceptable that those who suffered so greatly during the earlier part of their lives should live under impoverished circumstances at the end. 1. We take note of the fact that Holocaust (Shoah) survivors and other victims of Nazi persecution have today reached an advanced age and that they have special medical and health needs, and we therefore support, as a high priority, efforts to address in their respective states the social welfare needs of the most vulnerable elderly victims of Nazi persecution — such as hunger relief, medicine and homecare as required, as well as measures that will encourage intergenerational contact and allow them to overcome their social isolation. These steps will enable them to live in dignity in the years to come. We strongly encourage cooperation on these issues. 2. We further take note that several states have used a variety of creative mechanisms to provide assistance to needy Holocaust (Shoah) survivors and other victims of Nazi persecution, including special pensions; social security beneﬁts to non-residents; special funds; and the use of assets from heirless property. We encourage states to consider these and other alternative national actions, and we further encourage them to ﬁnd ways to address survivors’ needs.
77a Appendix G Immovable (Real) Property Noting that the protection of property rights is an essential component of a democratic society and the rule of law, Acknowledging the immeasurable damage sustained by individuals and Jewish communities as a result of wrongful property seizures during the Holocaust (Shoah), Recognizing the importance of restituting or compensating Holocaust-related conﬁscations made during the Holocaust era between 1933-45 and as its immediate consequence, Noting the importance of recovering communal and religious immovable property in reviving and enhancing Jewish life, ensuring its future, assisting the welfare needs of Holocaust (Shoah) survivors, and fostering the preservation of Jewish cultural heritage, 1. We urge, where it has not yet been effectively achieved, to make every effort to provide for the restitution of former Jewish communal and religious property by either in rem restitution or compensation, as may be appropriate; and 2. We consider it important, where it has not yet been effectively achieved, to address the private property claims of Holocaust (Shoah) victims concerning immovable (real) property of former owners, heirs or successors, by either in rem restitution or compensation, as may be appropriate, in a fair, comprehensive and nondiscriminatory manner consistent with relevant national law and regulations, as well as international agreements. The process of
78a Appendix G such restitution or compensation should be expeditious, simple, accessible, transparent, and neither burdensome nor costly to the individual claimant; and we note other positive legislation in this area. 3. We note that in some states heirless property could serve as a basis for addressing the material necessities of needy Holocaust (Shoah) survivors and to ensure ongoing education about the Holocaust (Shoah), its causes and consequences. 4. We recommend, where it has not been done, that states participating in the Prague Conference consider implementing national programs to address immovable (real) property conﬁscated by Nazis, Fascists and their collaborators. If and when established by the Czech Government, the European Shoah Legacy Institute in Terezín shall facilitate an intergovernmental effort to develop non-binding guidelines and best practices for restitution and compensation of wrongfully seized immovable property to be issued by the one-year anniversary of the Prague Conference, and no later than June 30, 2010, with due regard for relevant national laws and regulations as well as international agreements, and noting other positive legislation in this area. Jewish Cemeteries and Burial Sites Recognizing that the mass destruction perpetrated during the Holocaust (Shoah) put an end to centuries of Jewish life and included the extermination of thousands of Jewish communities in much of Europe, leaving the
79a Appendix G graves and cemeteries of generations of Jewish families and communities unattended, and Aware that the genocide of the Jewish people left the human remains of hundreds of thousands of murdered Jewish victims in unmarked mass graves scattered throughout Central and Eastern Europe, We urge governmental authorities and municipalities as well as civil society and competent institutions to ensure that these mass graves are identiﬁed and protected and that the Jewish cemeteries are demarcated, preserved and kept free from desecration, and where appropriate under national legislation could consider declaring these as national monuments. Nazi-Conﬁscated and Looted Art Recognizing that art and cultural property of victims of the Holocaust (Shoah) and other victims of Nazi persecution was conﬁscated, sequestered and spoliated, by the Nazis, the Fascists and their collaborators through various means including theft, coercion and conﬁscation, and on grounds of relinquishment as well as forced sales and sales under duress, during the Holocaust era between 1933-45 and as an immediate consequence, and Recalling the Washington Conference Principles on Nazi-Conﬁ scated Art as endorsed at the Washington Conference of 1998, which enumerated a set of voluntary commitments for governments that were based upon the moral principle that art and cultural property conﬁscated
80a Appendix G by the Nazis from Holocaust (Shoah) victims should be returned to them or their heirs, in a manner consistent with national laws and regulations as well as international obligations, in order to achieve just and fair solutions, 1. We reafﬁ rm our support of the Washington Conference Principles on Nazi-Conﬁscated Art and we encourage all parties including public and private institutions and individuals to apply them as well, 2. In particular, recognizing that restitution cannot be accomplished without knowledge of potentially looted art and cultural property, we stress the importance for all stakeholders to continue and support intensiﬁed systematic provenance research, with due regard to legislation, in both public and private archives, and where relevant to make the results of this research, including ongoing updates, available via the internet, with due regard to privacy rules and regulations. Where it has not already been done, we also recommend the establishment of mechanisms to assist claimants and others in their efforts, 3. Keeping in mind the Washington Conference Principles on Nazi-Conﬁscated Art, and considering the experience acquired since the Washington Conference, we urge all stakeholders to ensure that their legal systems or alternative processes, while taking into account the different legal traditions, facilitate just and fair solutions with regard to Nazi-conﬁscated and looted art, and to make certain that claims to recover such art are resolved expeditiously and based on the facts and merits of the
81a Appendix G claims and all the relevant documents submitted by all parties. Governments should consider all relevant issues when applying various legal provisions that may impede the restitution of art and cultural property, in order to achieve just and fair solutions, as well as alternative dispute resolution, where appropriate under law. Judaica and Jewish Cultural Property Recognizing that the Holocaust (Shoah) also resulted in the wholesale looting of Judaica and Jewish cultural property including sacred scrolls, synagogue and ceremonial objects as well as the libraries, manuscripts, archives and records of Jewish communities, and Aware that the murder of six million Jews, including entire communities, during the Holocaust (Shoah) meant that much of this historical patrimony could not be reclaimed after World War II, and Recognizing the urgent need to identify ways to achieve a just and fair solution to the issue of Judaica and Jewish cultural property, where original owners, or heirs of former original Jewish owners, individuals or legal persons cannot be identiﬁed, while acknowledging there is no universal model, 1. We encourage and support efforts to identify and catalogue these items which may be found in archives, libraries, museums and other government and nongovernment repositories, to return them to their original rightful owners and other appropriate individuals or
82a Appendix G institutions according to national law, and to consider a voluntary international registration of Torah scrolls and other Judaica objects where appropriate, and 2. We encourage measures that w ill ensure their protection, will make appropriate materials available to scholars, and where appropriate and possible in terms of conservation, will restore sacred scrolls and ceremonial objects currently in government hands to synagogue use, where needed, and will facilitate the circulation and display of such Judaica internationally by adequate and agreed upon solutions. Archival Materials Whereas access to archival documents for both claimants and scholars is an essential element for resolving questions of the ownership of Holocaust-era assets and for advancing education and research on the Holocaust (Shoah) and other Nazi crimes, Acknowledging in particular that more and more archives have become accessible to researchers and the general public, as witnessed by the Agreement reached on the archives of the International Tracing Service (ITS) in Bad Arolsen, Germany, Welcoming the return of archives to the states from whose territory they were removed during or as an immediate consequence of the Holocaust (Shoah),
83a Appendix G We encourage governments and other bodies that maintain or oversee relevant archives to make them available to the fullest extent possible to the public and researchers in accordance with the guidelines of the International Council on Archives, with due regard to national legislation, including provisions on privacy and data protection, while also taking into account the special circumstances created by the Holocaust era and the needs of the survivors and their families, especially in cases concerning documents that have their origin in Nazi rules and laws. Education, Remembrance, Research and Memorial Sites Acknowledg ing the impor tance of education and remembrance about the Holocaust (Shoah) and other Nazi crimes as an eternal lesson for all humanity, Recognizing the preeminence of the Stockholm Declaration on Holocaust Education, Remembrance and Research of January 2000, Recognizing that the Universal Declaration of Human Rights was drafted in signiﬁcant part in the realization of the horrors that took place during the Holocaust, and further recognizing the U.N. Convention on the Prevention and Punishment of the Crime of Genocide, Recalling the action of the United Nations and of other international and national bodies in establishing an annual day of Holocaust remembrance,
84a Appendix G Saluting the work of the Task Force for International Cooperation on Holocaust Education, Remembrance and Research (ITF) as it marks its tenth anniversary, and encouraging the States participating in the Prague Conference to cooperate closely with the Task Force, and Repudiating any denial of the Holocaust (Shoah) and combating its trivialization or diminishment, while encouraging public opinion leaders to stand up against such denial, trivialization or diminishment, 1. We strongly encourage all states to support or establish regular, annual ceremonies of remembrance and commemoration, and to preserve memorials and other sites of memory and martyrdom. We consider it important to include all individuals and all nations who were victims of the Nazi regime in a worthy commemoration of their respective fates, 2. We encourage all states as a matter of priority to include education about the Holocaust (Shoah) and other Nazi crimes in the curriculum of their public education systems and to provide funding for the training of teachers and the development or procurement of the resources and materials required for such education. 3. Believing strongly that international human rights law reﬂects important lessons from history, and that the understanding of human rights is essential for confronting and preventing all forms of racial, religious or ethnic discrimination, including Anti-Semitism, and Anti-Romani sentiment, today we are committed to
85a Appendix G including human rights education into the curricula of our educational systems. States may wish to consider using a variety of additional means to support such education, including heirless property where appropriate. 4. As the era is approaching when eye witnesses of the Holocaust (Shoah) will no longer be with us and when the sites of former Nazi concentration and extermination camps, will be the most important and undeniable evidence of the tragedy of the Holocaust (Shoah), the signiﬁcance and integrity of these sites including all their movable and immovable remnants, will constitute a fundamental value regarding all the actions concerning these sites, and will become especially important for our civilization including, in particular, the education of future generations. We, therefore, appeal for broad support of all conservation efforts in order to save those remnants as the testimony of the crimes committed there to the memory and warning for the generations to come and where appropriate to consider declaring these as national monuments under national legislation. Future Action Further to these ends we welcome and are grateful for the Czech Government’s initiative to establish the European Shoah Legacy Institute in Terezín (Terezín Institute) to follow up on the work of the Prague Conference and the Terezín Declaration. The Institute will serve as a voluntary forum for countries, organisations representing Holocaust (Shoah) survivors and other Nazi victims, and NGOs to note and promote developments in the
86a Appendix G areas covered by the Conference and this Declaration, and to develop and share best practices and guidelines in these areas and as indicated in paragraph four of Immovable (Real) Property. It will operate within the network of other national, European and international institutions, ensuring that duplicative efforts are avoided, for example, duplication of the activities of the Task Force for International Cooperation on Holocaust Education, Remembrance and Research (ITF). Following the conference proceedings and the Terezín Declaration, the European Commission and the Czech Presidency have noted the importance of the Institute as one of the instruments in the ﬁght against racism, xenophobia and anti-Semitism in Europe and the rest of the world, and have called for other countries and institutions to support and cooperate with this Institute. To facilitate the dissemination of information, the Institute will publish regular reports on activities related to the Terezín Declaration. The Institute will develop websites to facilitate sharing of information, particularly in the ﬁelds of art provenance, immovable property, social welfare needs of survivors, Judaica, and Holocaust education. As a useful service for all users, the Institute will maintain and post lists of websites that Participating States, organizations representing Holocaust (Shoah) survivors and other Nazi victims and NGOs sponsor as well as a website of websites on Holocaust issues. We also urge the States participating in the Prague Conference to promote and disseminate the principles
87a Appendix G in the Terezín Declaration, and encourage those states that are members of agencies, organizations and other entities which address educational, cultural and social issues around the world, to help disseminate information about resolutions and principles dealing with the areas covered by the Terezín Declaration. A more complete description of the Czech Government’s concept for the Terezín Institute and the Joint Declaration of the European Commission and the Czech EU Presidency can be found on the website for the Prague Conference and will be published in the conference proceedings. List of States 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Albania Argentina Australia Austria Belarus Belgium Bosnia and Herzegovina Brazil Bulgaria Canada Croatia Cyprus Czech Republic Denmark Estonia Finland France
88a Appendix G 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. FYROM Germany Greece Hungary Ireland Israel Italy Latvia Lithuania Luxembourg Malta Moldova Montenegro The Netherlands Norway Poland Portugal Romania Russia Slovakia Slovenia Spain Sweden Switzerland Turkey Ukraine United Kingdom United States Uruguay
The Holy See (observer) Serbia (observer)
89a Appendix H APPENDIX H — THE DEPARTMENT OF STATE BULLETIN, DATED JANUARY 9, 1943 THE DEPARTMENT OF STATE BULLETIN JANUARY 9, 1943 Vol. VIII, No. 185—Publication 1863 *** DECLARATION REGARDING FORCED TRANSFERS OF PROPERTY IN ENEMYCONTROLLED TERRITORY [Released to the press January 5] The text of a declaration which has been made by the United States and certain others of the United Nations, regarding forced transfers of property in enemycontrolled territory, follows: “The Union of South Africa, the United States of America, Australia, Belgium, Canada, China, the Czechoslovak Republic, the United Kingdom of Great Britain and Northern Ireland, the Union of Soviet Socialist Republics, Greece, India, Luxembourg, the Netherlands, New Zealand, Norway, Poland, Yugoslavia and the French National Committee: “Hereby issue a formal warning to all concerned, and in particular to persons in neutral countries, that they intend to do their utmost to defeat the methods of
90a Appendix H dispossession practiced by the governments with which they are at war against the countries and peoples who have been so wantonly assaulted and despoiled. “Accordingly the governments making this declaration and the French National Committee reserve all their rights to declare invalid any transfers of, or dealings with, property, rights and interests of any description whatsoever which are, or have been, situated in the territories which have come under the occupation or control, direct or indirect, of the governments with which they are at war or which belong or have belonged, to persons, including juridical persons, resident in such territories. This warning applies whether such transfers or dealings have taken the form of open looting or plunder, or of transactions apparently legal in form, even when they purport to be voluntarily effected. “The governments making this declaration and the French National Committee solemnly record their solidarity in this matter.” ****
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