Gowen v. Helly Nahmad Gallery, Inc., No. 650646/2014 (NY Sup. Ct. May 8, 2018) [click for opinion]

In 2014, George Gowen, as Ancillary Administrator for the Estate of Oscar Stettiner ("Plaintiff"), brought an action to recover Amedeo Modigliani's Seated Man with a Cane, 1918 painting (the "Painting"), which was allegedly taken by the Nazis and lost for over a half-century. Oscar Stettiner, a Jewish art dealer, was the original owner of the Painting, which was part of his private collection in Paris. As the Nazis advanced towards Paris, Stettiner fled his home, leaving behind the Painting, which was ultimately sold at an auction in 1944. However, in 1946, forced sales of property by the Nazi regime were declared null and void. Although Stettiner is alleged to have obtained an order granting the return of the Painting from the French courts, neither Stettiner nor his heirs were able to locate the Painting.

At a 1996 auction in London, the Painting was misidentified as being a different painting with a different owner, and Defendant International Art Center ("IAC") purchased the Painting. Between 2005-2006, IAC exhibited the Painting at Defendant Helly Nahmad Gallery. In 2008, the Painting was offered at auction at Sotheby's in New York City. After failing to sell the Painting at the auction, Defendants allegedly moved the Painting to a warehouse in Switzerland. In 2011, Phillippe Maestracci, a French resident and sole heir to the Estate of Oscar Stettiner, wrote the Defendants through counsel demanding the return of the Painting. After failing to receive a response, Maestracci commenced an action in the Southern District of New York. During the discovery phase of this federal action, IAC was revealed to be the owner of the Painting, which jeopardized diversity jurisdiction. Maestracci subsequently withdrew the federal action.

In 2014, Plaintiff commenced this state court suit seeking the return of the Painting. Defendants filed a motion to dismiss. The court considered numerous issues (including failure to state a cause of action, related pending matters, lack of legal capacity to sue, amendment of the complaint, absence of necessary parties, and the statute of limitations), but most notably, addressed Defendants' arguments that both personal and subject matter jurisdiction were lacking. While the court took judicial notice as to the laws of Switzerland and France, the court applied New York law.

After setting forth the legal standard of a motion to dismiss under N.Y. CPLR § 3211, the court first examined Defendants' arguments that the court lacked personal jurisdiction over them because they were neither residents nor domiciliaries of New York, nor had they conducted business in New York sufficient to establish personal jurisdiction over them.

With respect to Defendant IAC, the court found that personal jurisdiction was proper under CPLR § 302(a)(1) for two reasons. First, IAC transacted business in New York by and through its agents by engaging the Helly Nahmad Gallery to sell artwork owned by IAC. Second, Stettiner's heir, Phillippe Maestracci, became aware of IAC as title holder to the Painting when the ownership interest was revealed during the discovery phase of the prior federal action. He then made a demand in New York for the Painting's return. The unanswered demand was tortious conduct in New York giving rise to personal jurisdiction.

As to Defendant Davide Nahmad, the court found that it had personal jurisdiction over him by piercing the corporate veil of Defendant IAC. The court noted that Nahmad was the principal of IAC, and held all the shares of stock in IAC. Plaintiff further alleged that Nahmad had used IAC to conceal his name, and thus the name of the owner of the Painting, to perpetuate a wrong, and that IAC failed to adhere to corporate formalities. On this basis, the court held that there was personal jurisdiction over Nahmad.

Turning to the issue of the Act of State Doctrine (under which US courts refrain from adjudicating the legitimacy of acts undertaken by another government), the court found that both the US and the state of New York have historical and public policy-driven interests in adjudicating claims involving artwork looted during the Nazi regime, such that it weighs against using the Act of State Doctrine to defer to either Swiss or French law. Accordingly, the court found that it did not need to exercise judicial restraint against adjudicating the case.

As for comity and conflict of law questions, the court found that comity did not serve as a bar in determining whether New York law applied to claims involving looted art, as such claims are left to a conflict of laws analysis. After a review of both Swiss and French law, the court held that it need not consider those laws during the pendency of the action as New York had a stronger interest in protecting its valuable art market from stolen artwork, particularly in light of its reputation as a world-renowned center for art and culture. While the court took judicial notice of these foreign laws, it ultimately held that New York law would apply to the action.

The court similarly considered, but rejected, Defendants' argument that New York was an inconvenient forum. After weighing the factors, the court found that: the burden on the court would be minimal; litigating the dispute in an alternative forum such as France or Switzerland would result in serious travel costs to the parties; the residence of the parties was not of controlling importance because the parties and witnesses have no single, common country in which they all reside; and, the location of the witnesses would not prejudice Defendants because the CPLR contains provisions which permit depositions and testimony outside the state of New York. For all these reasons, the court denied Defendants' motion to dismiss.