Estate of Kainer v UBS AGEstate of Kainer v UBS AG
Cannataro, J.
On this appeal, plaintiffs ask us to hold that defendants’ motions to dismiss the complaint on forum non conveniens grounds must be denied as a matter of law. We conclude, however, that Supreme Court did not abuse its discretion in granting defendants’ motions to dismiss and therefore affirm.
This action involves a dispute over ownership of the proceeds of sale of an Edgar Degas painting entitled Danseuses that was stolen from Margaret Kainer by the Nazi regime in the 1930s. After she was dispossessed of her extensive art collection, Kainer, a former resident of Germany, lived as a refugee in Switzerland during World War II, and then relocated to France where she died in 1968. Plaintiffs are Kainer‘s estate and 11 putative heirs who allege that Kainer‘s estate passed to them under French intestacy law. Defendant Norbert Stiftung, previously known as the Norbert Levy Stiftung (hereinafter referrеd to as the Foundation) is a foundation allegedly provided for in the 1927 will of Kainer‘s father, to be established in the event that she died without children or grandchildren. Plaintiffs assert that, after Kainer‘s death, the predecessor of defendants UBS AG and UBS Global Asset Management (Americas) created the Foundation as a Swiss public entity under UBS‘s direction and control, and improperly obtained all of Kainer‘s assets. Plaintiffs further allege that the Swiss Canton of Vaud and the City of Pully were determined—based on false claims that Kainer was domiciled in these localities at the time of her death and had no heirs—to be sole
In 2000, the Foundation, allegedly acting in its capacity as heir, registered the painting as stolen in lost and looted art databases. In 2009, defendant Christie‘s Inc. contacted the Foundation seeking to facilitate a private sale of the painting by a Jaрanese gallery. The Foundation entered into a restitution settlement agreement with the gallery in which it renounced its rights to the painting in exchange for 30% of the proceeds from its sale. Christie‘s then arranged a private sale of the painting in Japan from which the Foundation received $1.8 million. A few days after the private sale, Christie‘s offered the painting at public auction in New York where it sold for $10.7 million.
Plaintiffs commenced this action in Supreme Court in January 2013, asserting numerous claims against the Foundation defendants, the UBS defendants and Christiе‘s including conversion, unjust enrichment, and conspiracy based on the 2009 sale of the painting and seeking damages. Defendants moved to dismiss the complaint on forum non conveniens grounds. In the alternative, all defendants except Christie‘s and the American arm of UBS moved for dismissal based on lack of personal jurisdiction.1 While the motions were pending, Congress enacted the Holocaust Expropriated Art Recovery Act of 2016 (HEAR Act) (see
Supreme Court granted the motions of the Foundation defendants and the UBS defendants to dismiss the complaint on forum non conveniens grounds, partially granted Christie‘s motion to the extent of dismissing certain causes of action against it for failure to state a claim, and stayed the remainder of the action against Christie‘s with leave to restore if plaintiffs obtained a final favorable determination on the question of ownership rights from the European courts (2017 NY Slip Op 32316[U] [Sup Ct, NY County 2017]). The court declined to address the issue of personal jurisdiction over the Foundation and UBS defendants as a threshold matter, relying upon the U.S. Supreme Court‘s decision in Sinochem Int‘l Co. v Malaysia Int‘l Shipping Corp. (549 US 422 [2007]). Instead, the court presumed personal jurisdiction over defendants and addressed the merits of their forum non conveniens arguments, concluding that the relevant factors “weigh heavily in favor of [a forum non conveniens] dismissal” (2017 NY Slip Op 32316[U], *9). Upon plaintiff‘s appeal, the Appellate Division unanimously affirmed (175 AD3d 403 [1st Dept 2019]). This Court granted plaintiffs’ motion for leave to appeal as against the Foundation
As a preliminary matter, plaintiffs assert that the courts below should not have addressed forum non conveniens without first resolving—and rejecting—certain defendants’ claims that the court lacked personal jurisdictiоn over them. Plaintiffs rely upon a statement in this Court‘s decision in Ehrlich-Bober & Co. v University of Houston (49 NY2d 574, 579 [1980]) that “the doctrine [of forum non conveniens] has no application unless the court has obtained in personam jurisdiction of the parties.” Plaintiffs’ reliance on this statement for the proposition that personal jurisdiction must be resolved before a forum non conveniens argument can be considered is misplaced.2 This procedural issue was not presented to either the Appellate Division or this Court in Ehrlich-Bober, where Supreme Court had, in fact, addressed and credited bоth grounds for dismissal, concluding that personal jurisdiction was lacking and the action should be dismissed on forum non conveniens grounds. The statement on which plaintiffs rely appears in the procedural history portion of our decision and was simply a description of the Appellate Division decision—in concluding that a forum non conveniens
With respect to forum non conveniens, we reject plaintiffs’ arguments that the motions to dismiss should have been denied as a matter of law.
Here, the motion court did not abuse its discretion in dismissing the action against the Foundation and UBS defendants on forum non conveniens grounds, and the Appellate Division did not err in affirming. To be sure, special circumstances are present: the origins of plaintiffs’ claims lie in “[t]he unique and horrific circumstances of World War II and the Holocaust” (
Accordingly, the order insofar as appealed from should be affirmed, with costs.
Before us is a dispute over ownership of an Edgar Degas painting entitled Danseuses, stolen from Margaret Kainer by the Nazis. It is estimated that during their occupation of Europe, the Nazis “pulled off the ‘greatest theft in history,’ seizing and transporting more than five million cultural objects to the Third Reich” (Robert M. Edsel, The Monuments Men xiv [2009]). This crime was part of the Holocaust, during which the Nazis perpetrated a systematic, state-sponsored mаss murder of approximately six million innocent Jewish people. The Nazis looted or destroyed hundreds of thousands, if not millions, of pieces of artwork as one of their many crimes against humanity. This has been called the ” ‘greatest displacement of art in human history’ ” (Von Saher v Norton Simon Museum of Art at Pasadena, 592 F3d 954, 957 [9th Cir 2010], quoting Michael J. Bazyler, Holocaust Justice: The Battle for Restitution in America‘s Courts 202 [NYU Press 2003]; see also Senator Chuck Grassley, Chair, Comm on Judiciary, Holocaust Expropriated Art Recovery Act of 2016, S Rep 114-394, 114th Cong, 2d Sess at 2 [2016]). For decades, the theft of many of these artworks was covered up, and the looted artwork displayed in museums and private collections with no restitution offered to the original owners or their heirs. More recently, efforts have been made to acknowledge and account for the Nazi theft of these precious items, including efforts by the United States government.
The majority concludes that we must apply our precedent regarding forum non conveniens, including the factors that we previously have articulated as relevant to that analysis. The Court further concludes that the lower courts did not abuse their discretion in dismissing plaintiffs’ complaint on that ground. Yet
Against this uniquely horrifying backdrop, I cannot agree that the dismissal on forum non conveniens grounds is consistent with the “interest of substantial justice” (
I respectfully dissent.
I.
Plaintiffs are the estate of Margaret Kainer and her purported heirs who are seeking either to recover the painting or restitution for its theft. They allege that defendants UBS AG, UBS Global Asset Management (Americas,
Plaintiffs further allege that, while falsely representing to defendant Christie‘s Inc. that it was the legitimate heir to Kainer‘s estate, the Foundation entered into a “Restitution Settlement Agreement” with Christie‘s in 2009, whereby the Foundation would renounce its claims of ownership in the Degas painting in order to make it marketable for sale in exchange for 30% of the proceеds of the sale. With that restitution settlement agreement in place, Christie‘s then facilitated the sale of the painting twice in a matter of days, first in a private sale for approximately $6 million, then less than a week later at public auction in New York for $10.7 million. Plaintiffs, who assert that they were unaware of defendants’ activities, the restitution settlement agreement, or the sale of the painting until 2011 or 2012, have not received any compensation from the sale of the painting.
In 2012, plaintiffs obtained a French “certificate of inheritаnce,” or COI, identifying them as the lawful heirs to Kainer‘s estate. A different COI issued in Germany in 1972 identifying the Foundation as the heir to three-quarters of the estate of Kainer‘s father was nullified in Germany in 2017. Plaintiffs assert that defendants are not currently challenging the French COI in any proceeding or otherwise currently challenging their status as heirs to Kainer‘s estate.
Plaintiffs commenced the present action in 2013 alleging numerous causes of action against defendants, including breach of fiduciary duty, conversion, unjust enrichment, and conspiracy, all centered аround the restitution settlement agreement and the 2009 sale of the painting in New York. Defendants moved to dismiss, as relevant here, on forum non conveniens grounds, asserting, among other things, that Switzerland was a suitable alternative forum. While those motions were still pending, the United States Congress enacted the Holocaust Expropriated Art Recovery Act of 2016 (HEAR Act), and that
II.
The rationale articulated by the lower courts for the forum non conveniens dismissal was based on their consideration of the factors that we have articulated are generally relevant to that analysis. Specifically, the courts reasoned that none of the plaintiffs resided in New York; that litigating in New York would present hardships for defendants; that New York courts would be required to apply foreign law to determine the parties’ rights as heirs and concomitant ownership interests in the painting, which would be a significant burden; and that plaintiffs had commenced proceedings in Switzerland in which they sought determination of their claims regarding their rights as Kainer‘s heirs, and therefore Switzerland was a suitable alternative forum (see 2017 NY Slip Op 32316[U], *17-25; 175 AD3d at 405-406).
These are the factors this Court has artiсulated as relevant to a forum non conveniens analysis (see Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479 [1984], cert denied 469 US 1108 [1985]). The lower courts cannot be faulted for applying those factors as we have articulated them. Nevertheless, we have also instructed that the “great advantage of the rule of forum non conveniens is its flexibility based on the facts and circumstances of each case” (
The factors that we have articulated as relevant to a forum non conveniens dismissal are not exclusive. The unique circumstances of each case must be considered, and the interests of substantial justice are paramount (see
It is the established public policy of New York, with a “worldwide reputation as a preeminent cultural center,” to protect the true owners of stolen artwork and to reject legal doctrines or policies that “encourage illicit trafficking in stolen art” (Solomon R. Guggenheim Found. v Lubell, 77 NY2d 311, 320 [1991]). This is not only the public policy of New York; it is the public policy of the United States. In 1998, the United States, along with 43 other participating nations, approved the Washington Conference Principles on Nazi-Confiscated Art, which include encouraging Holocaust victims and their heirs to “come forward and make known their claims to art that was confiscated by the Nazis and not subsequently restituted,” and to take steps “to achieve a just and fair solution” in such cases (U.S. Department of State, Office of the Special Envoy for Holocaust Issues, Washington Conference Principles on Nazi-Confiscated Art, Dec. 3, 1998, available at https://www.state.gov/washington-conference-principles-on-nazi-confiscated-art/ [last accessed Dec. 7, 2021]; see S Rep 114-394 at 3). Also in 1998, Congress enacted the
“all governments should undertake good faith efforts to facilitate the return of private and public property, such as works of art, to the rightful owners in cases where аssets were confiscated from the
claimant during the period of Nazi rule and there is reasonable proof that the claimant is the rightful owner” ( Pub L 105-158 , § 202, 112 US Stat 17-18 [1998]).
The HEAR Act of 2016 is further evidence of the public policy of the United States that claims of Nazi-looted art be determined on the merits. The HEAR Act was borne of a recognition that despite its previous efforts, the United States had “not fulfilled its promise to ensure that claims to art lost in the Holocaust are resolved on their merits” (S Rep 114-394 at 5). One obstacle to resolving such cases on the mеrits was state statutes of limitations (see id.). As noted above, the HEAR Act remedied this problem by enacting a uniform federal limitations period for claims regarding Nazi-looted artwork: six years from the date of actual discovery of the identity and location of the artwork and the claimant‘s possessory interest in it (see
“guarantee that the United States fulfills the promises it has made to the world to 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 claims” (S Rep 114-394 at 5-6 [internal quotation marks omitted]).
The HEAR Act expresses the public policy of the United States, consistent with the public policy of New York, that claims of Nazi-looted art be resolved on the merits, and that the rights of true owners of stolen artwork are protected.
Contrary to the conclusion reached by the lower courts, Switzerland is not a suitable alternative forum for the claims asserted by plaintiffs in this action. As plaintiffs explained in opposition to the motions to dismiss, Christie‘s is not subject to jurisdiction in Switzerland, and UBS is not a defendant in the Swiss litigation. Plaintiffs’ action filed in New York centered around the alleged conspiracy among the defendants, including Christie‘s and UBS, to facilitate the sale of the painting in New York in 2009. For that reason, I further disagree with my colleagues in the majority that plaintiffs’ action has only a “tenuous connection to New York” (majority op at 467). All of the causes of action in the complaint are based upon the 2009 restitution settlement agreement and the sale of this particular
Moreover, defendants have asserted procedural defenses in the Swiss proceedings, including the statute of limitations, that may prevent the Swiss courts from ever reaching a determination on the merits of plaintiffs’ claims to heirship. Granted, plaintiffs could have provided further information to the motion court about the limitations of the Swiss proceedings, including an explanation of the Swiss limitations period. Courts have recognized, however, that “Swiss law places significant hurdles to the recovery of stolen art, and almost ‘insurmountable’ obstacles to the recovery of artwork stolen by the Nazis from Jews and others during World War II and the years preceding it” (Bakalar v Vavra, 619 F3d 136, 140 [2d Cir 2010], citing In re Holocaust Victim Assets Litig., 105 F Supp 2d 139, 159 [ED NY 2000] [observing that Switzerland “has been described as a country to which buyers of stоlen art flock in order to claim Swiss law‘s protection of buyers” (internal quotation marks omitted)]). Indeed, the Swiss statute of limitations may present such an insurmountable bar to resolving plaintiffs’ claims on the merits in that jurisdiction (see Bakalar, 619 F3d at 145 n 3).
The majority asserts that the availability of an alternative forum is not a precondition to dismissal on forum non conveniens grounds (see majority op at 467). That is consistent with our statements in Pahlavi, but we also recognized in that case that “the availability of another suitable forum is a most important factor to be considered in ruling on a motion to dismiss” (Pahlavi, 62 NY2d at 481 [emphasis added]). Coupled with the public policy of New York and the United States in resolving claims of Nazi-looted art on the merits, as well as the overarching concern of substantial justice in a forum non conveniens dismissal, the barriers that Swiss law places on resolving such claims on the merits and defendants’ invocation of those barriers in the Swiss proceedings weigh heavily against dismissal.
Plaintiffs did not ask the motion court to condition any forum non conveniens dismissal on the defendants’ waiver of procedural defenses in the Swiss proceedings, nor did plaintiffs
Plaintiffs have waited a decade for resolution of their claims regarding the unlawful 2009 sale of the Degas painting on the merits. It has been almost a century since the Nazis stole and sold Margaret Kainer‘s art collection. A forum non conveniens dismissal does not comport with either substantial justice or the public policy of New York and the United States.
I respectfully dissent.
Chief Judge DiFiore and Judges Garcia, Wilson and Singas concur; Judge Fahey dissents in an opinion; Judge Rivera took no part.
Order insofar as appealed from affirmed, with costs.