When I spoke in Heidelberg in January at the Institute for Jewish Studies conference “Appropriated Art—the Gurlitt Case,” one of the points I stressed in discussing U.S. restitution litigation was that the longer the Gurlitt case went unresolved (and do not be distracted by the “Voice of Russia” article that is being circulated as “Holocaust victims’ heirs to reclaim Nazi-looted artwork if Gurlitt bill passsed”­—it is not remotely a simple or likely as that), the more certain it would be that litigation would follow in the U.S.  Gurlitt himself and his legal team have done their part recently to make any meaningful agreement impossible, and in the absence of unilateral action by Germany (which  would probably be illegal), it has now come to pass.  The first civil claim related to paintings seized from Cornelius Gurlitt’s apartment has now been filed by David Toren in the U.S. District Court for the District of Columbia against the Free State of Bavaria and the Federal Republic of Germany. 

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The lawsuit (Complaint attached here) seeks the return of Two Riders on the Beach (Zwei Ritter am Meer), by Max Liebermann, one of the iconic images that became associated with the Gurlitt affair immediately after its disclosure in Focus last November.  This is a smart tactical move, because the D.C. Circuit Court of Appeals, which oversees that court, has been receptive recently to jurisdiction under the Foreign Sovereign Immunities Act.  The lawsuit will face some immediate issues with its substantive and jurisdictional allegatons, however.  Remember: the plaintiff’s substantive claims are the reasons he argues he should get the painting back, but his jurisdictional allegations must be sufficient to bring the case in a U.S. federal court or it will go no further.  There, the case offers some tactical surprises. 

David Toren, a resident of New York, left Germany at age 14 in 1939.  His great uncle David Friedmann lived in Breslau, the capital of Silesia (now part of Poland, known as Wrocław).  As the Complaint explains, the Nazis catalogued and seized Friedmann’s art collecton in 1939-40, and the Liebermann painting appears on those  records.  A letter of Decmeber 5, 1939 is attached to the Complaint, which addresses as-yet unseized Jewish collections in Breslau, including Friedmann’s, as well as that of well-known collector Hans Sachs, interestingly.  Thereafter, the Complaint attaches a letter to Hildebrand Gurlitt dated August 28, 1942, which describes the Liebermann as “available.”  The author’s name is not legible on the letter.

The Complaint seeks recovery under several theories, but they fall into two groups: the first is bailment, the other is wrongful possession.  The latter is easy enough to understand: Toren claims that he is the true owner, and that Germany is wrongfully in possession of the work.  Under common law, he could recover the painting, its value, or some combination.  Clearly, if the work was his uncle’s an he is the heir, whoever has it now is wrongfully in possession. 

The bailment argument is on somewhat shakier ground.  Bailment is simply a word for entrusting property to another.  A valet is the baileee of your car, the coat room is the bailee of your jacket, for example.  It constitutes an agreement to hold property for someone else, and it lasts until the owner demands his property back.  This may sound familiar to readers of the Art Law Report, because it is a central theory of the De Csepel case against Hungary, and the primary reason that case survived dismissal and is now back in the District Court.  Here is the distinction, however: De Csepel alleges that Baron Herzog’s (the collector’s) heirs came to an agreement with Hungary after the war to hold his art in its museums, but did not demand its return until recently (thus avoiding the statute of limitations).  Here, Toren alleges that Germany’s unilateral decision to hold the seized art in 2012-present in pursuit of finding its owners constitutes a bailment agreement with those then-unnamed and unknown owners.  A contract requires two parties, however, and one of them cannot be unknown.  Under the objective theory of contract, a party cannot make an agreement with someone who it does not know exists.  A contract can benefit a class of persons whose specific identity is unknown, but that is not the claim here.  Expect a challenge Germany on this point to the extent the case gets to the merits.

Whether it will ever get to those merits seems even more uncertain.  Jurisdictionally, the case does not follow the Altmann v. Republic of Austria approach I would have expected (and probably advised): invoking the FSIA for a claim against a foreign sovereign related to property taken in violation of international law.  This is the so-called “appropriation excception” to sovereign immunity, which also requries an allegation (and later proof) that the sovereign defendant is engaged in commercial activity in the United States.  It is somewhat surprising, because at this point after Altmann and its progeny courts take almost at face value as facgt that the seizure of a Jewish collection by the Nazis was a violation of international law, and unlike some other countries, proving Germany’s commercial activity in the United States would be straightforward.  Bavaria is currently facing in New York a claim to Madame Soler by Picasso in the Pinakothek der Moderne from the Mendelssohn-Bartholdy heirs under a different FSIA exception, the commercial activity exception (in which the property itself is used in commerce in the U.S.), but that is not alleged here either (but could be for those paintings that Hildebrand Gurlitt exhibited in the United States, for example).

Instead, the Complaint relies on a different provision of the FSIA: 28 U.S.C. § 1605(a)(2), which states that “A foreign state shall not be immune from the jurisdiction of courts of the United States . . . in any case in which the action is based . . . upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.”  The “effect” that the Complaint alleges that Bavaria’s seizure of the paintings caused, was that its “constructive bailment” agreement (discussed above, the idea that there was an agreement with the true owners) was breached.  Since Toren is in the United States, he argues, the effects of the breach­—again, caused by the seizure in Munich—happened in New York and satisfy the statute. This is a creative theory, and creative theories have become the hallmark of those restitution claims that survive immediate dismissal, and deseve to be take seriously.  But here the argument seems circular.  The only effect in the United States alleged is the loss of possession of something that as far as we know has never been in the United States.  And the “cause” alleged for that loss is a breach of a purported agreement between Germany and Toren that Germany will deny exists.  The bailment theory is therefore essential to the jurisdictional theory, so if the bailment theory does not work, the court will not have jurisdiction to hear the other (wrongful possession) claims. 

Perhaps most interestingly, Gurlitt himself is not named as a defendant.  This is another challenge, becase the D.C. court probably does not have jurisdiction over Gurlitt, and Germany may argue that the case cannot be litigated without him because his rights are indispensible to the claim.  Where an indispensible party cannot be joined, a court may dismiss the case on that basis too. 

Mounting and understandable frustration (which Toren himself succinctly stated accompanying the filing) made a claim like this inevitable.  It remains to be seen, however, if this Complaint can make any headway.