One of the longest running art restitution litigations in the United States has been dismissed for a second time, with another appeal likely to follow.  The heirs of Lilly Cassirer Neubauer have been pursuing the return of Camille Pissarro’s Rue St. Honoré, après-midi, êffet de pluie from the Thyssen-Bornemisza Collection in Madrid for more than ten years, but on June 4, 2015 the U.S. District Court in Los Angeles ruled that the Spanish museum has acquired full title to the painting by adverse possession.  The key aspect of the decision is the court’s resolution of the choice of law question, namely, should California law or Spanish law apply to the question of who owns the painting?  After a lengthy analysis the court determined that Spanish law applies, and that the museum has possessed the painting long enough to have become the owner regardless of the fact that it was sold under duress.  So now a case that has already been to the Ninth Circuit Court of Appeals twice will almost certainly head back a third time.  The court concluded its decision by appealing to the parties to “pause, reflect, and consider whether it would be appropriate to work towards a mutually-agreeable resolution of this action, in light of Spain’s acceptance of the Washington Conference Principles and the Terezin Declaration, and, specifically, its commitment to achieve “just and fair solutions” for victims of Nazi persecution.”  But it is hard to see why that would happen.  Notwithstanding the dictates of the Washington Principles, the Collection has been quite content to resist the claim.  Now that it has won, it is hard to imagine it suddenly taking a different view.

Click here to view image.

Lilly Cassirer Neubauer was a German Jew who inherited the Pissarro in 1926.  There was no dispute of fact in the decision that she was subjected to persecution as such after 1933.  In 1939, she was forced to sell the painting to Jakob Schweidwimmer, a Nazi art appraiser.  She was “paid” a token amount far below value (roughly $360) into a blocked account that she could not access (just as the Welfenschatz consortium was “paid”).  Lilly survived the war but the location of the painting was unknown.   Baron Hans-Heinrich Thyssen- Bornemisza purchased the painting in 1976 through a New York dealer, Stephen Hahn, for $275,000.  Thyssen-Bornemisza’s collection was eventually sold to the Kingdom of Spain, and the painting has been on display at the museum bearing his name since it opened in 1992.  Claude Cassirer, Lilly’s heir, learned of its location in 2000 and began to seek its return, eventually filing suit in California in 2005.  The case relied on the same “expropriation exception” to sovereign immunity whose applicability to Nazi-looting claims the Supreme Court confirmed in 2004 in Altmann v Republic of Austria, and which has been the basis for numerous cases since.  Where the claim concerns rights in property taken in violation of international law, and the sovereign defendant or its instrumentality are engaged in commercial activity in the U.S., the Foreign Sovereign Immunities Act, 28 U.S.C. § 1605 (FSIA) provides jurisdiction.

The museum initially challenged the applicability of the FSIA, but the Ninth Circuit upheld jurisdiction in 2012, holding that the fact that Spain was not the complicit party in the expropriation (meaning Spain did not commit any crime in 1939 against Cassirer, Nazi Germany did) did not matter.  Rather, Spain and its instrumentality are sovereign defendants, and the other requirements of the statute were met.

While all this was going on, California passed in 2010 the second of two amendments to its statute of limitations.  The earlier abolition of any limitation on Holocaust era claims (California Code of Civil Procedure § 354.3) was struck down by the Ninth Circuit in the Von Saher case (by Jacques Goudstikker heir Marei von Saher) in 2010 as interfering with the foreign affairs doctrine of the United States.  California then amended the statute of limitations to be six years for any claim related to art (regardless of whether it was Nazi-looted art).  The Cassirer case was dismissed in 2012 by this same District Court, however, because the District Court found that the six-year limitation was still a foreign affairs impairment.  But in 2013 the Ninth Circuit reversed, finding the six-year statute of limitations consistent with the United States’ foreign affairs.

Last week’s decision was on the Thyssen-Bornemisza Collection’s motion for summary judgment.  A motion for summary judgment can be granted when a legal result is compelled by the undisputed material facts.  If material facts on which the result will turn are in dispute, summary judgment is inappropriate.  If the facts that are in dispute are not material to the legal question, then summary judgment can be grated.  So, for example, if the case is about who is at fault for a traffic accident and one side says the light was green but the other says it was red, summary judgment is unwarranted because that fact is material to who had the legal right to drive through the intersection.  If, on the other hand, the parties agree that the light was green, but disagree about the temperature that day, summary judgment is appropriate because that fact is irrelevant to the legal question.

Here, the court treated the fact of the painting’s Nazi era theft and the sequence by which it came to be in Spain as undisputed.  The remaining legal question is who owns it.  But to answer that question, the court had to decide which law applies.  This analysis happens all the time, particularly in federal court.  The Restatement (Second) of Conflict of Laws (a summary of the prevailing view across jurisdictions) § 222 sets forth the general choice-of-law principle applicable to interests in both real and personal property.  The factors relevant to the determination of which state has the most significant relationship to the “thing and the parties” include: (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, the protection of justified expectations, the basic policies underlying the particular field of law, certainty, predictability and uniformity of result, and ease in the determination and application of the law to be applied.

The court addressed these factors at great length, ultimately concluding that both California and Spain had significant interests in the outcome of the dispute, but that Spain’s was more significant.  While the court was cognizant of the plaintiffs’ relationship to California, it was unconvinced that the painting itself had such a relationship.  The telling passage was:

Although California has a fundamental interest in protecting its residents and specifically has an interest in protecting its residents claiming to be rightful owners of stolen art, that interest is far less significant where the original victim did not reside in California, where the unlawful taking did not occur within its borders, and where the defendant and the entity from which the defendant purchased the property were not located in California.

This conclusion effectively decided the case.  California does not allow adverse possession of personal property, while Spain does.  Adverse possession is one of those concepts about which most first-year law students say, “wait, what?”  It a nutshell (and more often in real estate), if you possess property that is not yours in a sufficiently obvious way for a long enough period of time, you become the legal owner.  It is more disfavored with personal property because of the obvious incentive for concealment; even though one has to adversely possess in a public way, it can create harder questions to resolve than whether a person was occupying a certain plot of land.

In any event, Spain does allow the doctrine, and the court concluded that the Collection had displayed the painting in a sufficiently public way that a true owner would have been on notice and made a claim before the time limit expired.

The adverse possession ruling decided the case, so the language of the opinion afterwards about the California statute of limitations should be considered dicta (opinion not essential to the holding).  But it is interesting to note that the court gave a sweeping and dismissive treatment of the revised six-year statute of limitations, arguing that it constituted a deprivation of property without due process.  This aspect of the decision is hastily composed and not terribly well-reasoned; citing an 1885 case that concludes (uncontroversially) that an after-the-fact amendment to a statute of limitations may deprive the possessor of its property (since absent the amendment, they would face no claim), the court concluded that this statute does just that.  But the logic of this paragraph of the opinion relies entirely on the conclusion that the Collection had adversely possessed the painting by the time the statute of limitations was extended, meaning the statute of limitations is irrelevant.

The opinion is a devastating setback for the claimants, for now at least.  To carry on they will have to convince the Ninth Circuit first and foremost that California, not Spanish, law should have been applied.  And that certainly will not happen any time soon.  I will follow up shortly with some thoughts about what impact this decision may, or may not, have more broadly.