ELLEN SEGAL HUVELLE, District Judge.
Plaintiffs David L. de Csepel, Angela Maria Herzog, and Julia Alice Herzog are descendants of Baron Mór Lipót Herzog, a Jewish Hungarian collector of art who amassed a collection of more than two thousand paintings, sculptures, and other artwork prior to his death in 1934. Plaintiffs allege that artwork comprising the Herzog Collection was seized by Hungary and Nazi Germany as part of a campaign of genocide against Hungarian Jews during World War II, and that at least forty works of art from the Herzog Collection are currently in the wrongful possession of Museum of Fine Arts (Szémpmüvészeti Múzeum) in Budapest, the Hungarian National Gallery, and the Museum of Applied Arts in Budapest (together, the "Museums"), as well as the Budapest University of Technology and Economics (the "University"), each of which is an agency or instrumentality of the Republic of Hungary (collectively, "defendants").
Plaintiffs have brought this action alleging that defendants breached certain bailment agreements entered into after World War II when they refused to return pieces of the Herzog Collection upon demand in 2008. Plaintiffs seek the return of these portions of the Herzog Collection, an accounting of all works of the Herzog Collection currently in defendants' possession, declaratory relief, and restitution based on unjust enrichment. Defendants have moved to dismiss pursuant to Rule 12(b)(1) for lack of jurisdiction under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 et seq., under the doctrine of forum non conveniens, and based on the 1973 Agreement between Hungary and the United States ("1973 Agreement"). In addition, defendants have moved to dismiss pursuant to Rule 12(b)(6) on the grounds that plaintiffs' claims are barred by the applicable statute of limitations, the act of state doctrine, the political question doctrine, and the doctrine of international comity. For the following reasons, defendants' motion is granted in part and denied in part.
The following facts are drawn from the allegations in the Complaint, which the Court accepts as true for purposes of evaluating a motion to dismiss, as well as the affidavits and other evidence presented by the parties on the issue of jurisdiction. Phillips v. Fulwood, 616 F.3d 577, 581 (D.C.Cir.2010) (citing Erickson v. Pardus, 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007)); Settles v. U.S. Parole Comm'n, 429 F.3d 1098, 1107 (D.C.Cir.2005) (court may consider facts beyond the complaint when ruling on a Rule 12(b)(1) motion).
Baron Mór Lipót Herzog, a well-known Jewish Hungarian art collector, amassed a collection of more than two thousand paintings, sculptures and other artworks (the "Herzog Collection"). (Compl. ¶¶ 1, 38.) After Baron Herzog's death in 1934, and the death of his wife in 1940, the Herzog Collection was divided among their three children—Erzsebét (Elizabeth) Weiss de Csepel, István (Stephen) Herzog and András (Andrew) Herzog. (Compl. ¶ 39.)
Plaintiff David L. de Csepel is a United States citizen who resides in Los Angeles, California. (Compl. ¶ 6.) He is the grandson of the late Elizabeth Weiss de Csepel, who became a U.S. citizen in 1952 and died in the United States in 1992. (Compl. ¶¶ 6, 63, 78.) Plaintiff de Csepel represents all of the heirs of Elizabeth Weiss de Csepel in this action, as well as the heirs of her brother, István Herzog, who died in Hungary in 1966. (Compl. ¶¶ 40, 42.)
Plaintiffs Angela Maria Herzog and Julia Alice Herzog are Italian citizens who reside in Rome, Italy, and are the daughters of the late András Herzog. (Compl. ¶¶ 7-8.) Plaintiffs Angela Herzog and Julia Herzog represent the heirs of András Herzog in this action and, together with Plaintiff de Csepel, they also represent the heirs of their uncle, István Herzog.
Defendant Republic of Hungary is a foreign state as defined in 28 U.S.C. § 1603(a). (Compl. ¶ 9.) Defendants Museum of Fine Arts, Hungarian National Gallery, Museum of Applied Arts and Budapest University of Technology and Economics are all agencies or instrumentalities of Hungary, as defined in 28 U.S.C. § 1603(b). (Compl. ¶¶ 11-14.)
On November 20, 1940, Hungary agreed to the Tripartite Pact signed by Germany, Italy, and Japan on September 27, 1940, and thereby joined the Axis Powers. (Compl. ¶ 46.)
During World War II, Hungary enacted various laws, modeled on Germany's Nuremberg laws, eliminating or severely restricting the public, economic and social rights of Jews. Among other things, these new laws defined "Jew" in racial terms, prohibited sexual relations or marriage between Jews and non-Jews, and excluded Jews from full participation in various professions. (Compl. ¶¶ 44-45, 47; Opp. Lattmann Decl. ¶¶ 6-16.)
During 1941 and 1942, thousands of Jews were deported by the Hungarian government to territories under German control, where they were brutally mistreated and massacred. (Compl. ¶ 49.) The Hungarian military and gendarme units also murdered hundreds of Jews and forced Jewish men into forced labor without providing them with adequate shelter, food, or medical care. (Compl. ¶¶ 49-50.) By March 1944, at least 27,000 Hungarian Jewish forced laborers—including András Herzog, the father of Plaintiffs Julia Herzog and Angela Herzog—had perished under these brutal conditions. (Compl. ¶ 50.)
In March 1944, Adolf Hitler sent German troops into Hungary to ensure Hungary's loyalty and to assist the Hungarian government in resisting the advancing Russian army. (Compl. ¶ 51.) Between May and July 1944, Hungarian authorities, working in collaboration with SS commander Adolf Eichmann, deported over 430,000 Jews—more than fifty percent of the entire pre-war Hungarian Jewish population. (Compl. ¶ 52.) By the time the Russians had overrun Hungary in early 1945, more than 500,000 of Hungary's pre-War population of 825,000 Jews were dead. (Id.)
During the Holocaust, Hungarian Jews—including the Herzogs—were required to register their art treasures. (Compl. ¶¶ 56-57.) While the Herzog family attempted to protect their art by hiding the bulk of it in the cellar of one of the family's factories at Budafok, the Hungarian government and their Nazi collaborators discovered the hiding place, and the chests containing the art were opened in the presence of Denes Csanky, the director of the Museum of Fine Arts. (Compl. ¶¶ 58-59.) The art was taken to Adolf Eichmann's headquarters at the Majestic Hotel in Budapest for his inspection. (Compl. ¶ 60.) Eichmann selected many of the best pieces to display as trophies and then shipped them off to greater Germany. (Id.) The remainder of the collection was taken over by the Museum of Fine Arts. (Id.) Other pieces from the Herzog Collection were seized by the Hungarian government from homes, safe deposit vaults, and other Herzog properties. (Compl. ¶ 61.)
In May 1944, Elizabeth and her children, together with other members of the Herzog and Weiss de Csepel families, fled to Portugal. Elizabeth immigrated to the United States in 1946, and became a U.S. citizen on June 23, 1952. (Compl. ¶ 63.) Plaintiffs Angela and Julia Herzog—the daughters of András Herzog—escaped to Argentina and eventually settled in Italy. (Compl. ¶ 64.) István Herzog and some members of his family remained in Hungary, while others escaped and settled in Switzerland. (Compl. ¶ 64.)
After World War II, Hungary and the Allies entered into a Peace Treaty in 1947. (See Opp. Benenati Decl. Ex. A.) Article 27 of the Peace Treaty provided:
(Id. art. 27(1).)
Plaintiffs assert that while the Hungarian government purported to "return" a handful of items from the Herzog Collection to the Herzog Heirs in the years immediately following the war, those "returns" were largely on paper or short-lived, and the vast majority of the Herzog Collection remained in the possession of Hungary, the Museums and the University. (Compl. ¶¶ 70-71.)
Even as to those pieces of the Herzog Collection that were physically returned to the Herzog Heirs, Hungarian government officials allegedly harassed and threatened the Heirs to whom they were returned, including the lodging of false smuggling allegations, until they agreed to re-deposit the works with the museums according to new bailment agreements so that they could be displayed and exhibited by defendants. (Compl. ¶¶ 72-73.) In 1948, the Museum of Fine Arts exhibited certain pieces of the Herzog Collection with labels expressly acknowledging that they were "on deposit." (Compl. ¶ 73.)
In 1947, a leftist bloc gained control of the Hungarian government, eventually leading to the creation of the Hungarian People's Republic in 1949. (Country Profile: Hungary, U.S. Dep't of State (May 19, 2011), http://www.state.gov/r/pa/ei/bgn/ 26566.htm.) All private industrial firms with more than ten employees were nationalized. (Id.) During the Communist era, Hungary did not recognize individual property rights. (Compl. ¶ 93.)
Consequently, relations between the United States and Hungary soon deteriorated. In 1951, the United States ordered the closure of all Hungarian consulates in the United States. (See Opp. Benenati Decl. Ex. R.) Pursuant to the Trading with the Enemy Act, the United States already held certain Hungarian assets blocked by Executive Order 8389, 3 C.F.R. 645 (1938-1943). (Id.) In 1955, the United States decided to use those blocked assets to compensate United States claimants and amended the International Claims Settlement Act of 1949 to authorize the Foreign Claims Settlement Commission (the "Commission") to consider claims by United States nationals against Bulgaria, Hungary, Italy, Romania and the former Soviet Union (the "First Hungarian Claims Program"). See Act of August 9, 1955, Pub.L. No. 84-285, 1955 U.S.C.C.A.N. (69 Stat. 570) 2745, 2748 (the "1955 Claims Amendment"). (See also Opp. Benenati Decl. Ex. R. at 537.)
The 1955 Claims Amendment authorized the Commission to adjudicate claims of United States nationals against Hungary for Hungary's failure:
(Opp. Benenati Decl. Ex. R. at 537.)
As of the effective date of the 1955 Claims Amendment, Elizabeth Weiss de Csepel—who had become a United States citizen on June 23, 1952—was the only United States citizen with an ownership interest in any portion of the Herzog Collection. (Compl. ¶ 63.)
After fleeing Hungary, the Herzog Heirs assert they were unable to get accurate information as to what had become of their property. (Compl. ¶ 75.) Elizabeth Weiss de Csepel believed at the time that certain artworks from the Herzog Collection that belonged to her had likely been nationalized by Hungary in 1954 as a result of Hungarian Museum Decree No. 13 of 1954 (the "1954 Museum Decree") (Bánki Decl., Ex. C).
Section 9(1) of the 1954 Museum Decree provided, in relevant part, that:
(Mot. Bánki Decl. Ex. C, p. 2 § 9(1); Opp. Lattmann Decl. ¶¶ 31-32.)
Because she and her family had fled Hungary during the Holocaust, Elizabeth
On April 13, 1959, the Commission awarded $210,000 to Elizabeth Weiss de Csepel for both the real estate and the artworks. The Commission's Proposed, Final, and Amended Final decisions expressly reserved Elizabeth's rights against the Hungarian government to recover the balance of her claim. (See Mot. Ramirez Decl., Exs. A, C, & D.)
In 1965, the United States began negotiations with Hungary in order to obtain compensation for the balance of the claims that had resulted in partial awards through the First Hungarian Claims Program. (See Opp. Benenati Decl. Ex. R. at 539.) At the meeting between United States and Hungarian officials on June 17, 1966, George Spangler, the United States chief negotiator, raised the issue of certain "nationalized" art collections belonging to former Hungarian citizens who had become naturalized citizens of the United States after the seizure of the artworks. Karolyi Reti, Hungary's chief negotiator, responded that "[a]rt collections had never been nationalized in Hungary." (See Opp. Benenati Decl. Ex. E at 237.) Reti also stated that the United States had no standing to press claims on behalf of claimants who were not United States nationals at the time their paintings came into the custody of the Museum of Fine Arts, and the United States negotiators agreed. (Id. at 238.)
On March 6, 1973, the United States and Hungary entered into an executive agreement. See Agreement Between the Government of the United States of America and the Government of the Hungarian People's Republic Regarding the Settlement of Claims, March 6, 1973, 24 U.S.T. 522 (the "1973 Agreement"). The 1973 Agreement provided that, in exchange for the lump sum payment of $18,900,000 by Hungary, there would be a "full and final settlement and . . . discharge of all claims of the Government and nationals of the United States against the Government and nationals of the Hungarian People's Republic which are described in this Agreement." Id., art. 1, § 1. The 1973 Agreement addressed four categories of claims:
Id., art. 2.
With the opening of Hungary to the West in 1989, the Herzog Heirs learned that many pieces of the Herzog Collection were being openly exhibited at the Museums. (Compl. ¶ 77.) Tags under the paintings identified them as "From the Herzog Collection." (Id.)
Elizabeth Weiss de Csepel, then 89 years old, attempted negotiations with the Hungarian government to recover the art that belonged to her. (Compl. ¶ 78.) She obtained only six paintings and a wood sculpture before her death in 1992—all of them works attributed to little known artists. (Id.) The identifiable masterworks remained in the Museum of Fine Arts and the Hungarian National Gallery. (Id.)
In the early 1990s, the Hungarian Parliament enacted two compensation laws. (Mot. at 15-16; Mot. Bánki Decl. Ex. F ("1991 Compensation Act"); Mot. Bánki Decl. Ex. G ("1992 Compensation Act").) None of the Herzog Heirs filed claims for art under the 1991 or 1992 Compensation Acts. (Pasztory Decl. ¶ 6.)
Following Elizabeth Weiss de Csepel's death in 1992, her daughter, Martha Nierenberg, inherited her share of the Herzog Collection and continued her mother's efforts to recover the art. (Compl. ¶ 79.) In 1996, the Hungarian Minister of Culture and Education appointed a Committee of Experts to determine who legally owned the Herzog Collection. (Pasztory Decl. ¶ 8.) The government appointed the Director of the Museum of Fine Arts and a legal representative of the Ministry of Foreign Affairs to the Committee. (Id.) The Committee met on several occasions in 1996 and 1997 and reviewed the ownership status of certain art objects that Martha Nierenberg asserted were the property of the heirs of Elizabeth and István Herzog. (Id. ¶¶ 9-10.)
In October 1999, after what plaintiffs describe as "months of silence" from the Hungarian government, plaintiffs concluded that Hungary had no genuine intention of returning the art, and Martha Nierenberg filed a lawsuit in Hungary to recover ten paintings that belonged to her mother, Elizabeth Weiss de Csepel. (Compl. ¶ 79.) She later amended her complaint to include two additional paintings. The Museum of Fine Arts, without explanation, returned one painting to her shortly after the litigation commenced. However, the litigation proceeded with respect to the remainder of the paintings. Plaintiffs Angela Herzog and Julia Herzog (as well as the sons of István Herzog—Stephen Gabriel Herzog and Peter Herzog) later intervened as defendants in the lawsuit, as there was initially a dispute (which was ultimately resolved) between them and Martha Nierenberg as to who owned certain of the artworks. (Opp. Varga Decl. ¶¶ 7-8; Mot. Bánki Decl. Ex. M.)
On October 20, 2000, the Budapest Metropolitan Court ordered that all except one of the paintings be returned to Martha Nierenberg. (See Opp. Varga Decl. Ex. A.) Among other things, the court rejected the defendants' argument that they had acquired ownership of the paintings by virtue of the 1954 Museum Decree, and agreed with Mrs. Nierenberg that the government
Defendants appealed the decision. On November 29, 2002, the Supreme Court of Hungary vacated the judgment of the Metropolitan Court on the ground that the court erred in concluding that the paintings belonged to Elizabeth Weiss de Csepel, rather than other Herzog Heirs, in the absence of participation in the lawsuit by all of the Herzog Heirs. (See Opp. Varga Decl. Ex. B at 12-13.) Therefore, the court remanded the case to the trial court for further proceedings. (Id.) The Supreme Court agreed with the lower court that the defendants had not established that the paintings had become state property as a result of Section 9 of the 1954 Museum Decree. (See id. at 14-16.) The Supreme Court also agreed with the lower court that no "nationalization . . . or other taking" of the paintings had occurred as provided in the 1973 Agreement. (Id. at 16) However, the Supreme Court asked the lower court to consider whether, in light of the compensation received by Elizabeth Weiss de Csepel from the United States Foreign Claims Settlement Commission, defendants had a claim for adverse possession based on their belief (even if erroneous) that they possessed the art as a result of the 1973 Agreement. (See id. at 17-18.)
On remand, the Metropolitan Court ordered the return of one painting to Martha Nierenberg on November 16, 2005, but otherwise dismissed the claim on the grounds of adverse possession. (See Opp. Varga Decl., Ex. C.) However, the court agreed with the findings of the prior two courts that Elizabeth Weiss de Csepel had left Hungary with the permission of the Hungarian state in 1944, and that the defendants always knew who owned the art. (See id. at 22-23.) Therefore, the court agreed that the 1954 Museum Decree had not given the state ownership of the art at issue. (Id.)
On January 10, 2008, nine years after Martha Nierenberg commenced her lawsuit, the Metropolitan Appellate Court dismissed Martha Nierenberg's claim in its entirety, holding that the 1973 Agreement barred Elizabeth Weiss de Csepel because the United States had awarded her compensation through the Foreign Claims Settlement Commission process. (See Mot. Bánki Decl. Ex. M.) The court also agreed with the lower court that the state had obtained ownership via adverse possession. (See Mot. Bánki Decl., Ex. M at 14-15.)
When reviewing a facial challenge to the Court's subject matter jurisdiction pursuant to Rule 12(b)(1), the Court must assume the truth of all factual allegations in the complaint, construing them in the light most favorable to the plaintiff, even if some are subject to dispute by the opposing party. See Republic of Austria v. Altmann, 541 U.S. 677, 681, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004); Phoenix Consulting, Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C.Cir.2000). Nonetheless, plaintiffs bear the burden of establishing subject matter jurisdiction. Pitney Bowes, Inc. v. U.S. Postal Serv., 27 F.Supp.2d 15, 19 (D.D.C.1998). In addition, "[w]hen a court rules on a Rule 12(b)(1) motion, it may `undertake an independent investigation to assure itself of its own subject matter jurisdiction,'" and it may consider "facts developed in the record beyond the complaint." Settles v. U.S. Parole Comm'n, 429 F.3d 1098, 1107 (D.C.Cir.2005) (quoting Haase v. Sessions, 835 F.2d 902, 908 (D.C.Cir.1987)).
To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6),
The Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602 et seq., provides the exclusive basis for asserting jurisdiction over a foreign state in a United States court. See Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-35, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989) (citing 28 U.S.C. § 1604; 28 U.S.C. § 1330(a)); accord Peterson v. Royal Kingdom of Saudi Arabia, 416 F.3d 83, 85 (D.C.Cir.2005); Agudas Chasidei Chabad v. Russian Fed'n, 466 F.Supp.2d 6, 14 (D.D.C.2006), rev'd in part on other grounds, 528 F.3d 934 (D.C.Cir.2008). In enacting the FSIA, Congress codified the "restrictive principle" of sovereign immunity, limiting the jurisdiction of American courts to hear claims against foreign states. Republic of Austria v. Altmann, 541 U.S. 677, 691, 124 S.Ct. 2240, 159 L.Ed.2d 1 (2004). Therefore, unless one of the statutory exceptions enumerated in 28 U.S.C. § 1605 is satisfied, a foreign state is immune from suit in United States courts. See 28 U.S.C. § 1604; Amerada Hess, 488 U.S. at 434-35 & n. 3, 109 S.Ct. 683. Sovereign immunity is a threshold issue, as it goes to the Court's subject matter jurisdiction. Altmann, 541 U.S. at 691, 124 S.Ct. 2240; Cassirer v. Kingdom of Spain, 616 F.3d 1019, 1026 (9th Cir.2010) (en banc).
The defendant-state has the ultimate burden of establishing immunity under the FSIA. Princz v. Fed. Republic of Germany, 26 F.3d 1166, 1171 (D.C.Cir. 1994). Once the defendant makes a prima facie showing that it is a foreign state, the plaintiff bears the burden of asserting at least some facts showing that one of the FSIA exceptions applies. Agudas Chasidei Chabad v. Russian Fed'n, 528 F.3d 934, 940 (D.C.Cir.2008); Crist v. Republic of Turkey, 995 F.Supp. 5, 10 (D.D.C.1998). The burden then shifts back to the defendant to prove, by a preponderance of the evidence, that the alleged exception does not apply. Chabad, 528 F.3d at 940.
To the extent that jurisdiction depends on particular factual propositions independent of the merits, the plaintiff must, on a challenge by the defendant, present adequate supporting evidence. Id. "For purely factual matters under the FSIA, however, this is only a burden of production; the burden of persuasion rests with the foreign sovereign claiming immunity, which must establish the absence of the factual basis by a preponderance of the
Plaintiffs rely primarily on the FSIA's expropriation exception, 28 U.S.C. § 1605(a)(3), to challenge defendants' assertion of sovereign immunity. Section 1605(a)(3) states in pertinent part:
This exception consists of two distinct clauses, and plaintiffs argue that the Court has jurisdiction under the second clause. (Compl. ¶ 21.) Therefore, in order to have jurisdiction, this Court must find that: (1) "rights in property" are at issue; (2) the property was "taken in violation of international law"; and (3) "the property at issue (or any property exchanged for it) [is] . . . `owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality' engages in commercial activity in the United States." Peterson, 416 F.3d at 86-87 (quoting 28 U.S.C. § 1605(a)(3)). As defendants do not dispute that "rights in property" (i.e., the ownership rights to the Herzog Collection) are "in issue," the Court will proceed to the second element.
A taking violates international law if: (1) it was not for a public purpose; (2) it was discriminatory; or (3) no just compensation was provided for the property taken. See Crist, 995 F.Supp. at 10-11 (citing Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 711 (9th Cir. 1992)); Cassirer, 616 F.3d at 1027; Restatement (Third) of Foreign Relations Law of the United States § 712 (1987). See also H.R.Rep. No. 94-1487, at 19-20, 1976 U.S.C.C.A.N. 6604, 6627 (describing phrase "taken in violation of international law" as including expropriations that are "arbitrary or discriminatory in nature"). At the jurisdictional stage, the Court need not decide whether the taking actually violated international law; as long as plaintiffs' claims are "substantial and non-frivolous," they provide a sufficient basis for the exercise of jurisdiction. Chabad, 528 F.3d at 941-42.
The Complaint clearly alleges substantial and non-frivolous claims that the Herzog Collection was taken without just compensation and for discriminatory purposes. Specifically, it alleges that despite efforts by the Herzog family to prevent the confiscation of their artwork by hiding the bulk
Defendants argue that these seizures cannot be considered violations of international law, because both Ms. Nierenberg and Ms. Weiss de Csepel were Hungarian citizens, and therefore the seizure of their property by the Hungarian government did not violate international law. (Mot. at 34-35.) Indeed, is well-settled that a state's taking of the property of its own citizens, no matter how egregious, does not constitute an international law violation. Dreyfus v. Von Finck, 534 F.2d 24, 31 (2d Cir.1976) (finding no international law violation where "aggrieved parties are nationals of the acting state," despite fact that taking was pursuant to Nazi racial decrees); see also Altmann, 541 U.S. at 728, 124 S.Ct. 2240 (Breyer, J., concurring) (noting "consensus view" of lower courts that the FSIA expropriation exception's "reference to `violation of international law' does not cover expropriations of property belonging to a country's own nationals"); Altmann v. Republic of Aus., 317 F.3d 954, 968 (9th Cir.2002) (plaintiff cannot be a citizen of the defendant country at the time of the expropriation, because "expropriation by a sovereign state of the property of its own nationals does not implicate settled principles of international law.") (citing Siderman de Blake, 965 F.2d at 711); Yang Rong v. Liaoning Provincial Gov't, 362 F.Supp.2d 83, 102 (D.D.C.2005) ("[C]onfiscations by a state of the property of its own nationals, no matter how flagrant and regardless of whether compensation has been provided, do not constitute violations of international law.").
Plaintiffs, however, argue that Hungary did not consider Ms. Nierenberg and Ms. Weiss de Csepel to be Hungarian citizens at the time of the seizures, as evidenced by the anti-Semitic laws passed by Hungary during World War II. (Opp. at 30.) Specifically, plaintiffs argue that as of 1944, Hungarian Jews could not acquire citizenship by means of naturalization, marriage, or legalization (Opp. Lattmann Decl. ¶ 6); vote or be elected to public office (id. ¶ 7); be employed as civil servants, state employees, or schoolteachers (id.); enter into enforceable contracts (id.); participate in various industries and professions (id. ¶ 8); participate in paramilitary youth training or serve in the armed forces (id. ¶ 9); own property (id. ¶ 10); or acquire title to land or other immovable property (id. ¶ 11). Moreover, all Hungarian Jews over the age of six were required to wear distinctive signs identifying themselves as Jewish, and were ultimately subject to complete forfeiture of all assets, forced labor inside and outside Hungary, and ultimately genocide. (Id. ¶¶ 14-17.)
Defendants argue in response that "plaintiffs['] own statements and submissions" undercut the assertion that their predecessors were not Hungarian citizens at the time of the taking in 1944. (Reply at 9 n. 7.) Specifically, defendants point to a formal submission by Ms. Nierenberg's attorney to the Hungarian courts in 1999 that Ms. Nierenberg "did not surrender
Notwithstanding the fact that Ms. Nierenberg still considered herself to be a Hungarian citizen in 1944, it is clear that under these extraordinary facts, the government of Hungary thought otherwise and had de facto stripped her, Ms. Weiss de Csepel, and all Hungarian Jews of their citizenship rights. Consequently, the alleged Hungarian "citizenship" of plaintiffs' predecessors does not preclude the application of the expropriation exception in this case. See Cassirer v. Kingdom of Spain, 461 F.Supp.2d 1157, 1165-66 (applying expropriation exception to Nazi Germany's seizure of German national's property where plaintiff argued that Nazi citizenship laws precluded citizenship for Jews), aff'd in part, 616 F.3d 1019 (9th Cir.2010) ("By [1939], German Jews had been deprived of their civil rights, including their German citizenship."). Cf. Roboz v. Kennedy, 219 F.Supp. 892, 894 (D.D.C. 1963) (finding that plaintiffs were not "domiciled in, or a subject, citizen or resident of" Hungary under the International Claims Settlement Act, because they had a firm intent to leave Hungary, had lost their home, had no rights in law, and could not vote); Kaku Nagano v. McGrath, 187 F.2d 759, 768 (7th Cir.1951) (noting that under the Trading with the Enemy Act, "our concept of a citizen is one who has the right to exercise all the political and civil privileges extended by his government" and that "[c]itizenship conveys the idea of membership in a nation").
Moreover, even if defendants are correct that the seizure of the Herzog Collection by Hungary alone would not constitute a violation of international law, the Complaint also states a substantial and non-frivolous taking in violation of international law based on the active involvement of German Nazi officials in the taking of at least a portion of the Herzog Collection. (Compl. ¶¶ 59-61.) Specifically, the Complaint avers that the German Nazis assisted the Hungarian government in the discovery of the bulk of the Herzog Collection in Budafok, and that this artwork was taken directly to Adolf Eichmann's headquarters following its seizure. (Id. ¶¶ 59-60.)
In addition, defendants argue that Hungary has cured any previous violations of international law arising out of the taking of the Herzog Collection by way of the 1973 Agreement with the United States, pursuant to which Hungary paid the United States $18.9 million to resolve and extinguish claims by U.S. nationals relating to "measures of nationalization, compulsory liquidation, expropriation, or other taking" by Hungary. (Opp. at 35-37.) Moreover, Hungary argues that the Hungarian 1991 and 1992 Compensation Acts provided
As explained below, the 1973 Agreement did not compensate plaintiffs for the 1944 takings of the Herzog Collection because it did not settle the claims of individuals— such as plaintiffs' predecessors—who were not United States citizens at the time of the takings. (See infra Part III.) As for the post-Communist era compensation legislation, the 1991 Act applied only to Communist-era nationalization, and plaintiffs did not apply for or receive compensation under this Act. (Opp. Lattmann Decl. ¶ 25.) While the 1992 Compensation Act did allow for compensation for World War II-era claims, plaintiffs did not apply for or receive compensation for the Herzog Collection under this Act, and it appears that the Act itself does not purport to settle all such claims or preclude a legal action seeking the return of stolen goods in lieu of compensation. (Opp. Pasztory Decl. ¶ 6; Opp. Lattman Decl. ¶ 30; Opp. Varga Decl. ¶ 17.)
In sum, the Court finds that plaintiffs' claim that the Herzog Collection was taken in violation of international law is substantial and non-frivolous, and therefore, it adequately satisfies the second requirement of the FSIA's expropriation exception.
The third requirement of the FSIA's expropriation exception requires a commercial activity nexus between the foreign state (or its agency or instrumentality) that owns or operates the property at issue and the United States. 28 U.S.C. § 1605(a)(3) Plaintiffs here rely on the second clause of this requirement, which requires that the entity that owns or operates the property at issue be "engaged in a commercial activity in the United States." Id. The FSIA defines commercial activity as "either a regular course of commercial conduct or a particular commercial transaction or act," id. § 1603(d), and courts have "broad discretion to `determin[e] what is a commercial transaction for purposes of' the FSIA." Chabad, 466 F.Supp.2d at 24 (quoting H.R.Rep. No. 94-1487, at 16 (1976), 1976 U.S.C.C.A.N. 6604, 6621) (internal quotation marks omitted) (alternations in original). The term "commercial" distinguishes governmental acts from those that can be engaged in by private persons or entities. Id. (citing Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992)) ("[W]hen a foreign government acts . . . in a manner of a private player within [a market], the foreign sovereign's acts are `commercial' within the meaning of the FSIA." (alterations in original))
Defendants argue that a separate definition of "commercial activity" set forth at 28 U.S.C. § 1603(e) should also apply here, and therefore, the necessary commercial activity under the expropriation exception must involve "substantial contact" with the United States. (Opp. at 37-39; see 28 U.S.C. § 1603(e).) But the D.C. and Ninth Circuits have recently rejected this very
Chabad, 528 F.3d at 947; accord Cassirer, 616 F.3d at 1033 n. 19 ("The second clause. . . is subject to the broader definition of `commercial activity' in § 1603(d), which does not mention `substantial contact.'").
Plaintiffs have pled—and defendants admit—that the Museums and the University (both agencies or instrumentalities of Hungary) are in possession of the pieces of the Herzog Collection identified in the Complaint. (Compl. ¶¶ 2, 15-20; Opp. at 45.) Moreover, "possession is sufficient to satisfy the `owned or operated' requirement of 28 U.S.C. § 1605(a)(3)." Chabad v. Russian Federation, 729 F.Supp.2d 141, 147 (D.D.C.2010). Moreover, plaintiffs have established for jurisdictional purposes that the Museums and the University are engaged in "either a regular course of commercial conduct or a particular commercial transaction or act" in the United States as of the commencement of this action. 28 U.S.C. § 1603(d). Specifically, the Complaint alleges that the Museums and University have loaned art to museums located in the United States and received reciprocal benefits in exchange; encouraged United States tourism and allowed United States visitors to purchase admission tickets over the internet; published guidebooks in English featuring paintings from the Herzog Collection which are sold to visitors from the United States at the museum gift shop, which accepts U.S. credit cards; authored and promoted books and other publications about the paintings, and sold these books online through Amazon; accepted orders for printed reproductions of the paintings directly from U.S. residents and shipped those prints directly to the U.S.; engaged in tourist advertising in the U.S. (including promotional brochures that promote works comprising a portion of the Herzog collection); and with respect to the University, participated in student exchange programs and the United States Fulbright Program. (Compl. ¶¶ 32-33.) These examples are more than sufficient to amount to "commercial activity" for jurisdictional purposes under the FSIA. See Chabad, 528 F.3d 934 at 948 (finding that contracts for the publishing and sale of documents and papers with U.S. publishing firms "easily satisf[ied]" the commercial activity requirement under § 1603(d)); Cassirer, 461 F.Supp.2d at 1173-76 (state-owned Foundation alleged to have, inter alia, sold posters, books, and licensed reproductions of images in the U.S., shipped gift-shop items to U.S. purchasers, and placed advertisements in magazines distributed in the U.S.).
Given this showing that one of the FSIA exceptions applies, the Court concludes that it has subject matter jurisdiction over
Defendant argues that plaintiffs' claims are governed by the 1973 Agreement, which they argue settled and precluded all claims for the "nationalization, compulsory liquidation, expropriation or other taking" of property between 1939 and 1973. (Mot. at 16.) As the FSIA was adopted "[s]ubject to existing international agreements to which the United States is a party at the time of the enactment of this Act [enacted Oct. 21, 1976]," 28 U.S.C § 1604, defendants conclude that plaintiffs claims are barred and that this Court lacks jurisdiction. (Opp. at 21-28.)
In response, plaintiffs correctly point out that the 1973 Agreement was based on the concept of espousal, which is the process by which a state acts on behalf of its citizens to settle claims against another state on their behalf, and as a result, the United States may only espouse claims by persons who were United States citizens at the time of their injury. Dayton v. Czechoslovak Socialist Republic, 834 F.2d 203, 206 (D.C.Cir.1987).
Defendants counter that the 1973 Agreement lacks an explicit provision that only claims of U.S. nationals who were citizens at the time of the alleged taking are covered and extinguished by the Agreement, citing contract cases for the "well-settled principle of contract law, that the plain and unambiguous meaning of an instrument is controlling." (Reply at 7.) The 1973 Agreement, however, is an international treaty—not a private contract—and must be interpreted as such. While "[t]he interpretation of a treaty, like the interpretation of a statute, begins with its text," Medellin v. Texas, 552 U.S. 491, 506, 128 S.Ct. 1346, 170 L.Ed.2d 190 (2008) (emphasis added), a treaty is "`an agreement among sovereign powers,'" and as such courts may consider "the negotiation and drafting history of the treaty as well as `the postratification understanding of signatory nations.'" Id. at 507, 128 S.Ct. 1346 (quoting Zicherman v. Korean Air Lines Co., 516 U.S. 217, 226, 116 S.Ct. 629, 133 L.Ed.2d 596 (1996)).
Both Hungary and the United States expressly recognized the inherent limitations on espousal authority during negotiations of the 1973 Agreement. (Opp. Benenati Decl. Ex. E at 238 (minutes of negotiations of 1973 Agreement in which Hungary's chief negotiator acknowledges (and the United States negotiator confirms) that the United States did not have standing to espouse claims on behalf of persons who were not U.S. citizens at the time their property was taken).) Moreover, the State Department clearly and consistently recognized this interpretation of the 1973 Agreement immediately after its execution. (Opp. Benenati Decl. Ex. ¶ (1973 letter from State Department personnel explaining to a member of Congress that it is a "universally accepted principle of international law that a state does not have the right to ask another state to pay compensation to it for losses sustained by persons who were not its citizens at the time of loss"); id. Ex. G (1973 letter from State Department personnel to potential claimant explaining that "[u]nder customary international law, a state has standing to present a claim against another state only if the claim belongs to one of its nationals and it has been owned by the national from the date
(Id. Ex. F.) See also Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 184-85, 102 S.Ct. 2374, 72 L.Ed.2d 765 (1982) ("Although not conclusive, the meaning attributed to treaty provisions by the Government agencies charged with their negotiation and enforcement is entitled to great weight.") (citation omitted). Accordingly, even if the United States were able to settle and bar the claims of non-citizens, it is clear that this was not the interpretation ascribed to the Agreement by the United States or Hungary at any time before, during, or after its negotiation (at least until Hungary took such a position in connection with this case). Therefore, the 1973 Agreement can only settle and bar those of plaintiffs' claims that arose out of takings by Hungary between 1952 (the year Elizabeth Weiss de Csepel became a U.S. citizen)
Plaintiffs assert that the 1973 Agreement cannot bar any of their claims because there was no such "taking" between 1952 and 1973. (Opp. at 45.) Any relevant "takings," they claim, occurred during the Holocaust and in 2008 when Hungary repudiated the demand of Martha Nierenberg for the return of the art, thereby breaching the bailment created after World War II. (Opp. at 45; Compl. ¶¶ 79, 94, 104, 107.) The only potential United States citizen who could have been covered by the 1973 Agreement is Elizabeth Weiss de Csepel, and only then if there was a taking of her property between 1952 and 1973.
To the extent defendants argue that plaintiffs' art was taken pursuant to the 1954 Museum Decree, the Complaint alleges a substantial and nonfrivolous claim to the contrary. The 1954 Museum Decree applied to art that was in the custody of a Hungarian museum and whose owner was either unknown or had left the country without permission. (Opp. Lattman Decl. ¶ 32; Bánki Decl. Ex. C § 9(1).) Plaintiffs assert that neither of these conditions applies to Ms. Weiss de Csepel's art, as defendants "always knew who owned the items from the Herzog Collection that were in their possession, and Elizabeth Weiss de Csepel cannot be considered to have left the country without permission." (Opp. at 47; Opp. Pasztory Decl. ¶¶ 11-12; Opp. Varga Decl. ¶¶ 12-15.)
Defendants argue that the claim filed by Elizabeth Weiss de Csepel with the Foreign Claims Settlement Commission under the First Hungarian Claims Program extinguished at least a portion of plaintiffs' claims here, given that the Commission ultimately awarded partial compensation to Ms. Weiss de Csepel for twelve works of art, "which were taken without compensation
Ms. Weiss de Csepel, however, was only partially compensated by the Commission, receiving a payment of just $169,827 for both the artwork and the confiscated real property. (Opp. Benenati Decl. Ex. D.) Therefore, the award from the Commission under the First Hungarian Claims Program did not prevent Ms. Weiss de Csepel from seeking additional recovery from Hungary, including restitution of the property itself. Section 313 of the 1955 Claims Amendment provided:
Act of August 9, 1955, Pub.L. No. 84-285, 1955 U.S.C.C.A.N. (69 Stat. 570) 2745, 2748 (codified at 22 U.S.C. § 1641l) (emphasis added). Plaintiffs are therefore not seeking to review or overturn "the action of the Commission in allowing or denying any claim," 22 U.S.C. §§ 1623(h), 1641(m), and accordingly, the 1955 Claims Amendment does not strip this Court of jurisdiction.
Defendants raise several challenges to plaintiffs' bailment claims pursuant to Rule 12(b)(6). First, defendants assert that the 1947 Peace Treaty signed by Hungary cannot create private rights or provide for a private cause of action, such as an action for bailment, in the absence of express language providing for such an action in the treaty. (Reply at 12-13.) As the Peace Treaty does not contain such express language, defendants argue that "Plaintiffs' theory that the Peace Treaty purports to provide them with a private cause of action (bailment) against Hungary fails." (Id. at 13.) Plaintiffs' claims, however, do not depend on the existence of a bailment created by the Peace Treaty itself. Rather, the Complaint alleges breach of express and/or implied bailment agreements between defendants and the Herzog family. Specifically, the Complaint alleges:
(Compl. ¶ 36); see also id. ¶ 99 ("the Herzog Heirs and the representatives had no
Therefore, while plaintiffs' bailment claim is consistent with Hungary's representations in the 1947 Peace Treaty (see Compl. ¶ 69 ("The 1947 Peace Treaty . . . confirmed that Hungary was to act solely as a custodian or trustee of looted or heirless property")), plaintiffs do not assert that the bailment was created by virtue of the Peace Treaty.
Defendants further suggest that plaintiffs' bailment theory fails as a matter of law. In the District of Columbia, a bailment requires delivery by the bailor, acceptance by the bailee, and a change of possession and control from one to the other. Bernstein v. Noble, 487 A.2d 231, 234 (D.C.1985). Defendants suggest that because they already possessed the artwork at the time the bailments were allegedly created, no "change in possession and control" could have occurred at that time, thereby defeating the creation of a bailment. (Reply at 14.) Defendants' argument, however, lacks legal support. The cases cited by defendants stand for the unremarkable proposition that a change in possession and control is a necessary condition for the creation of a bailment. See Black Beret Lounge & Restaurant v. Meisnere, 336 A.2d 532, 532 (D.C.1975) (no bailment where restaurant never had possession or control of coat left in an unattended cloakroom); Dumlao v. Atlantic Garage, Inc., 259 A.2d 360, 362 (D.C.1969) (no bailment of property in automobile trunk where hotel had no knowledge of the trunk's contents). In other words, no bailment can be created where the bailee never possesses the property at all or does not know that he has accepted the property. These cases do not stand for the altogether different proposition that no bailment is created where the transfer of possession and control has already occurred. See 8A Am.Jur.2d Bailments § 40 (2011) (acknowledging existence of bailments arising "where the bailee is already in possession of the property"); Hoffmann v. United States, 17 Fed.Appx. 980, 989 (Fed.Cir. 2001) (finding genuine issue of material fact as to the existence of an implied-in-fact bailment where property seized in 1945 and authorized Government officials subsequently made representations that it would be returned). Here, since defendants admit to possession of the artwork in question (Opp. at 45), it is undisputed that the requisite transfer of possession and control from the Herzog family to defendants has occurred.
Defendants also argue that plaintiff cannot show that Hungary consented to the creation of a bailment, a deficiency they claim is dispositive because a bailment is a form of contract requiring mutual consent of the parties. The assent of the parties to a bailment, however, may
Here, plaintiffs have pled that defendants, while recognizing the ownership rights of the Herzog Heirs, exercised possession and control over the Herzog Collection in such a manner as to imply a bailment relationship. (See Compl. ¶¶ 36, 70-73, 99). In addition, plaintiffs charge that Hungary made public representations concerning Holocaust-looted property in the 1947 Peace Treaty that are consistent with plaintiffs bailment theory. (Compl. ¶ 69 ("The 1947 Peace Treaty among Hungary and the Allies confirmed that Hungary was to act solely as a custodian or trustee of looted or heirless property [and that] under no circumstances could Hungary itself possess any right, title or interest in the property.").)
Defendants argue that the Court should dismiss the action under the doctrine of forum non conveniens. In deciding
The burden is on the defendants to satisfy the threshold requirement of demonstrating the existence of an adequate alternate forum with jurisdiction over the case. El-Fadl v. Central Bank of Jordan, 75 F.3d 668, 677 (D.C.Cir.1996). Defendants argue that Hungary is an adequate alternate forum, and at least two district courts in the past ten years have reached a similar conclusion. See Moscovits v. Magyar Cukor Rt., 00-cv-0031, 2001 U.S. Dist. LEXIS 9252, at *14 (S.D.N.Y. June 29, 2001) (granting motion to dismiss on forum non conveniens grounds because Hungary was an adequate alternative forum); Dorfman v. Marriott Int'l Hotels, Inc., 99-cv-10396, 2001 WL 69423, at *7, 2001 U.S. Dist. LEXIS 642, at *23 (S.D.N.Y. Jan. 26, 2001) (noting that Hungary is an adequate forum). Hungarian courts demonstrably have jurisdiction to hear plaintiffs' claims, as evidenced by the Nierenberg litigation that occurred there between 1999 and 2008. Plaintiffs assert that the Hungarian courts cannot provide them with appropriate redress because, in their view, "Hungarian courts consider any claims to the Herzog Collection to be barred by the passage of time." (Opp. at 52.) As the opinion from the Nierenberg litigation makes clear, however, the Hungarian courts have not taken a uniform position with regard to all Holocaust-era artwork, or even as to the entire Herzog Collection. Rather, the Metropolitan Appellate Court (as well as the lower Hungarian courts) analyzed plaintiffs' claim to each piece of art separately, taking account of the particular factual circumstances and history surrounding each painting before arriving at its decision. (See Mot. Bánki Decl. Ex. M.) Having already lost their case in Hungary as to the eleven pieces of art at issue there, plaintiffs may well be justified in their belief that they would lose a similar case regarding the rest of the Herzog Collection. But a foreign forum "is not inadequate merely because it has less favorable substantive law." El-Fadl, 75 F.3d at 678.
Assuming, therefore, that Hungary is an adequate alternative forum, the Court nevertheless concludes that defendants have failed to show that the balance of private and public factors favors dismissal in this case. The relevant private interest factors are: (1) "relative ease of access to sources of proof"; (2) "availability of compulsory process for attendance of unwilling" witnesses; (3) cost of attendance of witnesses; (4) enforceability of a judgment, if obtained; and (5) "other practical problems that make trial of a case easy, expeditious and inexpensive." Am. Dredging, 510 U.S. at 448, 114 S.Ct. 981 (citing Gulf Oil, 330 U.S. at 508, 67 S.Ct. 839). Relevant public interest factors include: (1) the preference for deciding local controversies at home, and conversely (2) the preference for resolving significant issues in a more central forum;
As to the private interest factors, Hungary maintains that as the events at issue in this action took place in Hungary, any relevant witnesses that are still alive are most likely located in Hungary and speak Hungarian or Magyar as their first language. (Mot. at 42.) In addition, Hungary notes that it is "a democratic nation, recognized member of the European Union, and is the [former] president of the European Union," and thus "it cannot be reasonably asserted that Plaintiffs (or their predecessors) could not receive a fair trial in that country." (Id.) Plaintiffs counter that many relevant witnesses—namely, plaintiffs themselves as well as Martha Nierenberg—all live outside Hungary. Language concerns, therefore, do not shift the balance in favor of Hungary, as relevant depositions and documents would require translation regardless of where this matter is heard. See Chabad, 466 F.Supp.2d at 29 (rejecting cost of translating documents as a significant factor where documents would require translation regardless of forum). In addition, plaintiffs note that the Court has the power to attach Hungary's property in the United States in aid of executing any judgment rendered under the FSIA. See 28 U.S.C. § 1610(a)(3), (b)(2). Thus, as to the private factors, it cannot be concluded that they favor dismissal.
As for the public factors, Hungary argues that Hungarian courts have an interest in having local controversies decided at home and are better able to interpret and apply both current and historical Hungarian laws as they apply to plaintiffs' claims. (Mot. at 42; Reply at 38.) This showing by Hungary does little more than state the public interest factors, and falls far short of demonstrating that the "strong presumption" in favor of plaintiffs' choice of forum should be disturbed. Piper Aircraft, 454 U.S. at 255, 102 S.Ct. 252. This Court is a designated forum for all actions brought under the FSIA, see 28 U.S.C. § 1391(f)(4), and is familiar with the issues of law presented by such a case. See, e.g., Chabad, 466 F.Supp.2d 6. Moreover, "there is a public interest in resolving issues of significant impact in a more central forum, such as this one." Id. at 29-30 (citing Gulf Oil, 330 U.S. at 509, 67 S.Ct. 839). As this is not a diversity case, but one implicating matters of international law, either Hungary or the United States may have to deal with foreign legal concepts. See Gulf Oil, 330 U.S. at 509, 67 S.Ct. 839. Finally, the Court notes that there is no burden on potential jurors, as jury trials are not available in suits brought under the FSIA. Chabad, 466 F.Supp.2d at 30.
For all of these reasons, the Court denies defendants' motion to dismiss on forum non conveniens grounds.
Defendants argue that plaintiffs' claims are barred by the applicable statute of limitations. Motions to dismiss "based on a limitations defense are disfavored because resolution generally requires the development of a record and the adjudication of factual issues." Malewicz v. City of Amsterdam, 517 F.Supp.2d 322, 335 (D.D.C.2007) (citing Richards v. Mileski, 662 F.2d 65, 73 n. 13 (D.C.Cir.1981)). "Dismissal on statute of limitations grounds is only appropriate when the complaint establishes the defense on its face." Id.
Defendants claim that numerous events have transpired since the end of World War II that have triggered the three-year statute of limitations, including Elizabeth Weiss de Csepel's claim before the Foreign Claims Settlement Commission in 1959, plaintiffs' learning that "many pieces of the Herzog collection were being openly exhibited" in Hungary (Compl. ¶ 77), Ms. Weiss de Csepel's death in 1992 (Compl. ¶¶ 78, 79), and the filing of the Nierenberg litigation in Hungary in 1999. Thus, at the very least, Hungary argues, the statute of limitations expired in October 2002, three years after Ms. Nierenberg filed suit in Hungary following the collapse of negotiations between plaintiffs and the Hungarian government.
In response, plaintiffs assert that Ms. Weiss de Csepel was mistaken in her belief in the late 1950s that Hungary had nationalized a portion of the Herzog Collection pursuant to the 1954 Museum Decree because plaintiffs were unable to obtain accurate information as to what had become of the Collection during the Communist era. (Compl. ¶¶ 75, 93.) Moreover, defendants have failed to point to actions of the defendants (as opposed to Ms. Weiss de Csepel) in the late 1950s with respect to the Herzog Collection "that a reasonable person would understand to be either an act of conversion or inconsistent with a bailment." See Malewicz, 517 F.Supp.2d at 335.
In any event, plaintiffs assert that their claims should be equitably tolled during the Communist era. A statute of limitations may be equitably tolled "when the plaintiff `despite all due diligence . . . is unable to obtain vital information bearing on the existence of his claim.'" Chung v. U.S. Dept. of Justice, 333 F.3d 273, 278-79 (D.C.Cir.2003) (quoting Currier v. Radio Free Europe, 159 F.3d 1363, 1367 (D.C.Cir. 1998) (alteration in original)). The Complaint alleges precisely this—that plaintiffs were unable to obtain information about the fate of the Herzog Collection during the Communist era and would not have been able to obtain relief even had they obtained such information, given that Hungary did not have an independent judiciary (or even recognize most individual property rights) during this period. (Compl. ¶¶ 75, 76, 93.)
Although plaintiffs may have learned additional information concerning the whereabouts of the Herzog Collection between 1989 and 1999, plaintiffs argue that their bailment action had not yet accrued at this time. "Where a demand and refusal are relied on to show a conversion, the refusal must be absolute and unconditional.
The Complaint alleges that the Herzog Heirs "promptly commenced negotiations with the Hungarian government following the collapse of Communism in 1989" (Compl. ¶ 94), and that these negotiations continued until Ms. Nierenberg filed suit in Hungary in 1999. (Compl. ¶¶ 77-79.) Moreover, the Complaint further states that "for years, Hungary actively misled the Herzog Heirs into believing that it accepted their ownership rights to the Herzog Collection, was giving their claims serious consideration, and repeatedly advised them that it would reach a favorable decision, at which time they could decide if any further action would be required." (Compl. ¶ 94.) Assuming plaintiffs can establish these facts, plaintiffs' bailment action could not have arisen during the period in which they were engaged in good-faith negotiations with the Hungarian government, as defendants had not yet "absolutely and unconditionally" refused plaintiffs' demand for return of the Collection.
Finally, plaintiffs suggest that their claims should be tolled during the pendency of the Nierenberg litigation. While the District of Columbia has no provision automatically tolling the applicable statutes of limitation during the pendency of actions in foreign courts, plaintiffs argue that the claims should be equitably tolled during this period. (Opp. at 60-61.) As the Court has noted previously in the administrative context, in certain circumstances it may be "appropriate to equitably toll statutes of limitations under D.C. law where claimants first sought to exhaust their available administrative remedies." Owens v. District of Columbia, 631 F.Supp.2d 48, 57 (D.D.C.2009); accord Pettaway v. Teachers Ins. & Annuity Ass'n of Am., 547 F.Supp.2d 1, 5-6 (D.D.C.2008) (finding "good cause to equitably toll the District of Columbia's three-year statute of limitations" for plaintiff's ERISA claim because she pursued her rights diligently through mandatory channels for exhausting administrative remedies); Waldau v. Coughlin, No. 95-1151, 1996 WL 312197, at *9 (D.D.C. June 3, 1996) (concluding that plaintiff's efforts to administratively exhaust claims through Merits Systems Protective Board tolled statute of limitations for Bivens claims under D.C. law); cf. Gull Airborne Instruments, Inc. v. Weinberger, 694 F.2d 838, 844 & n. 8 (D.C.Cir.1982) (rejecting laches defense where delay in filing suit resulted from exhausting administrative remedies because, inter alia, "it would be an injustice to unsuccessful bidders [on government procurement contracts] if we now penalized them merely for exhausting those administrative remedies" and because plaintiff's "many attempts to receive administrative relief served to put the government on notice that [plaintiff] was not sleeping on its rights").
Defendants cite several cases which stand for the proposition that the District of Columbia does not automatically toll statutes of limitations where a plaintiff mistakes her remedy by filing in the wrong venue or otherwise commits procedural error. See Carter v. Wash. Metro.
The Court therefore concludes that the Complaint states fact which, if true, could support a finding that this action is timely. Accordingly, the Court declines to resolve this issue on a motion to dismiss.
Hungary invokes the act of state doctrine, which "`precludes the courts of this country from inquiring into the validity of public acts of a recognized foreign sovereign power committed within its own territory.'" World Wide Minerals v. Republic of Kazakhstan, 296 F.3d 1154, 1164 (D.C.Cir.2002) (quoting Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964)). The doctrine rests on the view that such judgments might hinder the conduct of foreign relations by the branches of government empowered to make and execute foreign policy, Sabbatino, 376 U.S. at 423-25, 84 S.Ct. 923, and applies whenever either "the relief sought or the defense interposed would [require] a court in the United States to declare invalid the official act of a foreign sovereign." W.S. Kirkpatrick & Co. v. Envtl. Tectonics Corp., Int'l, 493 U.S. 400, 405, 110 S.Ct. 701, 107 L.Ed.2d 816 (1990). The act of state doctrine "`is not a jurisdictional limit on courts,'" Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 707 (9th Cir. 1992) (quoting Liu v. Republic of China, 892 F.2d 1419, 1431 (9th Cir.1989)), and a motion to dismiss based on the act of state doctrine is therefore properly considered under Rule 12(b)(6), not Rule 12(b)(1). In order to dismiss a complaint under Rule 12(b)(6) based on the act of state doctrine, the Court "must be satisfied that there is no set of facts favorable to the plaintiffs and suggested by the complaint which could fail to establish the occurrence of an act of state." Ramirez de Arellano v. Weinberger, 745 F.2d 1500, 1534 (D.C.Cir. 1984), rev'd on other grounds, 471 U.S. 1113, 105 S.Ct. 2353, 86 L.Ed.2d 255 (1985).
The "key question" in determining whether the act of state doctrine applies, is "whether the act in question is truly a sovereign act—that is, an act `jure imperii,' an act that is taken `by right of sovereignty.'" Malewicz, 517 F.Supp.2d at 338 (quoting Black's Law Dictionary 854 (7th ed.1999)). By contrast, "purely commercial" acts do not require deference under the act of state doctrine. Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 698, 96 S.Ct. 1854, 48 L.Ed.2d 301 (1976)
As an initial matter, plaintiffs' primary claim for bailment does not implicate the act of state doctrine. Plaintiffs allege that they entered into a series of bailment agreements with defendants after World War II, and that defendants have breached these bailments by refusing to return
The question of jurisdiction under the FSIA (see supra Part II), requires this Court to determine whether the Herzog Collection was taken in violation of international law, a question that may implicate the act of state doctrine. See Sabbatino, 376 U.S. at 428, 84 S.Ct. 923 ("[T]he [Judicial Branch] will not examine the validity of a taking of property within its own territory by a foreign sovereign government, extant and recognized by this country at the time of suit . . . even if the complaint alleges that the taking violates customary international law.")
To the extent the Court is being asked to pass judgment on the acts of a foreign sovereign, however, the sovereigns involved are Nazi Germany and their allies in the World War II-era Hungarian government. Confronted by similar facts, courts have consistently held that the act of state doctrine does not apply to the Nazi taking of Jewish property during the Holocaust. See Chabad, 466 F.Supp.2d at 26 (declaring such takings "manifestly illegal"); Bodner v. Banque Paribas, 114 F.Supp.2d 117, 130 (E.D.N.Y.2000) ("The wholesale rejection of the Vichy government at the close of World War II render[s] the Act of State doctrine wholly inapplicable to this case."). There is no reason to apply a different standard to the actions taken by Hungary toward its Jewish population during World War II. (See Compl. ¶¶ 54-57; Opp. Lattmann Decl. ¶¶ 4-18.) Moreover, the balance of factors weighs against applying the act of state doctrine where "the government which perpetuated the challenged act of state is no longer in existence." Sabbatino, 376 U.S. at 428, 84 S.Ct. 923. Thus, it will not be invoked here.
With the exception of a single footnote that cited no supporting authority (Opp. at 25 n. 19), defendants failed to raise their argument for dismissing this case on political question grounds until their reply brief, where they devote more than nine pages to the issue. This is plainly insufficient under this Circuit's precedents. See Sugar Cane Growers Coop. of Fla. v. Veneman, 289 F.3d 89, 93 n. 3 (D.C.Cir.2002) ("a footnote at the end of their opening brief does not suffice" to raise a claim on appeal); Hutchins v. District of Columbia, 188 F.3d 531, 539 n. 3 (D.C.Cir.1999) ("We need not consider cursory arguments made only in a footnote."); Bean Dredging, LLC v. United States, 773 F.Supp.2d 63, 71 n. 5 (D.D.C.2011) (same).
But even if the Court were to consider this argument, it would reject it. The political question doctrine is firmly rooted in separation-of-powers principles and instructs that courts should decline to adjudicate matters which have "in any measure been committed by the Constitution to another branch of government." Baker v. Carr, 369 U.S. 186, 211, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962).
Defendants argument that plaintiffs' claims have been committed to the Executive branch are based entirely on the notion that plaintiffs' claims are addressed and settled by the 1947 Peace Treaty and the 1973 Agreement between Hungary and
Finally, defendants assert that plaintiffs' claims are barred by the doctrine of international comity, and ask that this Court respect the prior judgment of the Hungarian courts in the Nierenberg litigation by dismissing this case. (Mot. at 52-56.)
Unlike domestic judgments, foreign judgments are not automatically entitled to preclusive effect in United States courts. Hilton v. Guyot, 159 U.S. 113, 16 S.Ct. 139, 40 L.Ed. 95 (1895). Instead, "the theory often used to account for the res judicata effects of foreign judgments is that of comity." In re Arbitration Between Int'l Bechtel Co. & Dep't of Civ. Aviation of the Gov't of Dubai, 300 F.Supp.2d 112, 117 (D.D.C.2004); see also Hilton, 159 U.S. at 164, 16 S.Ct. 139. Under the doctrine of international comity, "the merits of the case should not, in an action brought in this country upon the judgment, be tried afresh, as on a new trial or on appeal, upon the mere assertion of the party that the judgment was erroneous in law or in fact" if
Id. at 202.
The judgment in the Nierenberg litigation involved the claims of only a single plaintiff, Martha Nierenberg, and applied only to eleven paintings claimed to be solely owned by her and known to be in the custody of defendants. The instant matter involves two additional plaintiffs (in addition to Ms. Nierenberg's son), two additional defendants (the Museum of Applied Arts and the University), and over 40 pieces of art, most of which were not at issue in the Nierenberg litigation. Consequently, the Nierenberg litigation cannot have preclusive effect as to the pieces of artwork not at issue in that litigation. Drake v. FAA, 291 F.3d 59, 66 (D.C.Cir. 2002) ("a judgment on the merits in a prior suit bars a second suit involving the same parties or their privies based on the same cause of action") (emphasis added).
As for plaintiffs' claim for the return of the eleven artworks at issue in the
Plaintiffs charge that the Hungarian courts "improperly held that the 1973 Agreement covered takings" that were plainly outside its scope, thereby violating the "strong public interest" of the United States "in ensuring that its executive agreements . . . are interpreted correctly." (Opp. at 70.) Plaintiffs further allege that Hungary "has a long history of avoiding accepting responsibility for its acts of genocide during World War II and has consistently avoided any meaningful attempt to restitute property—and especially art— belonging to Hungarian Jews." This is precisely the type of "mere assertion" by a party that a foreign judgment "was erroneous in law or in fact" that the Supreme Court has held may not be grounds for declining to respect the results of foreign judgments. Hilton, 159 U.S. at 202, 16 S.Ct. 139. Plaintiffs do not assert, as they must, that there has not been an "opportunity for a full and fair trial" in Hungary "before a court of competent jurisdiction, conducting the trial upon regular proceedings." Id. Defendants appeared in the prior case, and plaintiffs have not charged that Hungary's judiciary is unable "to secure an impartial administration of justice" in actions against the Hungarian government or its agencies or instrumentalities. Id. Moreover, the record is devoid of evidence of "either prejudice in the court, or in the system of laws under which it was sitting, or fraud in procuring the judgment, or any other special reason why the comity of this nation should not allow it full effect." Id.
For the foregoing reasons, defendants' Motion to Dismiss is granted as to plaintiffs' claims to the eleven pieces of artwork at issue in the Nierenberg litigation but denied in all other respects.
