Grossman LLP | New Lawsuit Filed Against Bavarian State Over Allegedly Nazi-Looted Artworks
This links to the home page
Art Law Blog
  • New Lawsuit Filed Against Bavarian State Over Allegedly Nazi-Looted Artworks
    The heirs of a prominent Jewish art dealer have sued the Bavarian state over a group of eight valuable paintings that were allegedly looted when the dealer fled Nazi Germany.  See Docket No. 16-09360 (S.D.N.Y.).  The filing likely marks the start of another complex litigation against a sovereign state over artwork clouded by actions taken during the Nazi era.

    The plaintiffs are the sole heirs of Alfred Flechtheim, a major dealer in Expressionist and Modernist art prior to the Nazis’ rise to power in Germany in 1933.  They claim that Flechtheim, as a successful Jewish businessman and a dealer in art the Nazis considered “degenerate,” was persecuted by the Nazis; the complaint cites and includes Nazi propaganda that targeted him specifically during the months immediately before and after the Nazis seized power in January 1933.  According to plaintiffs, Flechtheim fled the country in May 1933, and ultimately his businesses were “Aryanized” (an official process that referred to the state-sponsored takeover of a Jewish-owned business) and eventually liquidated, while much of his private collection and personal property, including the works at issue here, were placed under the control of a Nazi tax advisor who sold much of Flechtheim’s property for the benefit of his purported creditors and the Nazi government.  He died, impoverished, in London in 1937; by the early 1940s, most of his family was dead and all that remained of his estate had been seized by the authorities.

    The artworks at stake, which, according to the complaint, came from Flechtheim’s own personal holdings, include six works by Max Beckmann (whom Flechtheim’s gallery at one time represented), one by Juan Gris, and one by Paul Klee.  They are currently in the collection of an instrumentality of the Bavarian government, and reports indicate they are likely worth, collectively, around $20 million.

    According to the complaint, the Bavarian state has taken the position that it rightfully owns the works because they were the gift of a donor, Franke, who allegedly acquired the works in 1932, before the Nazis took power.  Flechtheim’s heirs, however, say that there is no proof of Franke’s 1932 purchase, and that to the contrary, there is evidence that the works still belonged to Flechtheim after that date.  They assert that Franke was a Nazi supporter and that Franke and Flechtheim did not get along, making a deal between them unlikely.  The complaint also seeks to debunk an alternative theory of ownership that has apparently been advanced by Bavaria, involving a 1932 sale by Flechtheim to another dealer, Neumann, of all of Flechtheim’s Beckmann holdings (which then passed from Neumann to Franke); this, too, the plaintiffs say, never happened, pointing to correspondence indicating that the Flechtheim-Neumann sale fell apart during negotiations.

    In other words, the plaintiffs do not dispute that Franke eventually came into possession of the paintings at issue; the plaintiffs’ stance, however, is that Franke did not have good title to them and thus could not have passed good title when he subsequently donated them to the Bavarian state.  They note that Bavarian authorities have been unable to provide convincing proof that Franke acquired the paintings through legitimate means.

    Fascinatingly, the story told in the complaint intersects with another major story that has transfixed the art world in recent years—the 2012 discovery of the infamous Gurlitt Collection.  Our previous posts on the Gurlitt affair contain more details, but in short, Hildebrand Gurlitt was one of only a few dealers authorized by Nazi leaders to trade in what the Nazis called “degenerate” works of art confiscated or looted by the Nazis.  After the fall of Nazi Germany, the Gurlitt family claimed that Hildebrand’s art holdings had been destroyed during the war.  But in 2013, German authorities announced that hundreds of artworks—including masterpieces by Picasso, Gauguin, Chagall, Monet, Matisse, and many others—had been discovered hidden in a small Munich apartment belonging to Hildebrand’s reclusive son, Cornelius.  More works later surfaced in Cornelius’s other residences in Austria.  The months following the discovery were marked by debate and confusion as Gurlitt and various authorities tried to agree as to how the works should be handled, and a task force began the mammoth undertaking of researching the works’ provenance.  In May 2014, however, Cornelius died at age 81, and named as his sole heir the Kunstmuseum Bern in Switzerland, an institution with which he had no prior dealings.  The museum has continued the daunting task of restituting the works, but only a handful have actually been returned to their rightful owners, and the process has been criticized by many for its slow pace and lack of transparency.

    According to the plaintiffs in the Flechtheim case, before the younger Gurlitt’s death, he admitted, in an agreement with the Flechtheim heirs, that his father, the elder Gurlitt, acquired from Flechtheim in 1934 a Bechtmann painting; this, the plaintiffs say, casts major doubt on the Bavarian authorities’ account that Flechtheim had already sold off all of his Bechtmann holdings in 1932.  Moreover, the plaintiffs say, the Bavarian government possesses records from the Gurlitts that would help shed light on the paintings’ history, but has refused to release those papers to plaintiffs or the public.

    The actual claims advanced here include a request for a declaration as to the ownership of the paintings, a claim for replevin (that is, the return of the works themselves), and damages claims for conversion, unjust enrichment, breach of fiduciary duty, and breach of an implied bailment.

    This new lawsuit is noteworthy for many reasons, including:

    • The case is against a foreign sovereign nation, and thus poses unique legal issues. Specifically, the plaintiffs will need to address the Foreign Sovereign Immunities Act, which provides that American courts can hear claims against foreign governments only under very specific and limited circumstances.  Here, the complaint seeks to lay the groundwork for arguing that the case falls into an exception to the FSIA for cases where property was taken in violation of international law, if there is some commercial activity that ties the property to the United States.  See 28 U.S.C. § 1605(a)(3).  The complaint emphasizes that the Bavarian instrumentality that controls the work, among other activities, publishes and sells books about its art collections in the United States, loans works to U.S. museums, licenses photos of its holdings to U.S. entities, solicits U.S. patrons to subscribe to its publications and visit and donate to its museums, and has sold images of its artworks (including some of the works at issue here) in the U.S. via a rights management company.
    • The complaint takes care to outline how quickly the Nazi regime became a totalitarian power and how efficiently and viciously the persecution of Jews was undertaken; the goal, besides providing historical context, is presumably to demonstrate why Flechtheim fled Germany so soon after January 1933, and why any transfers on or after that date, by nature, occurred under duress. These issues are part of a larger conversation about exactly when Nazi persecution began and ended; a recent piece of federal legislation (now awaiting the president’s signature) regarding Nazi-era art restitution claims focuses on the period beginning January 1, 1933 to December 31, 1945.
    • The plaintiffs emphasize the Washington Principles and the Terezin Declaration (to which both the U.S. and Germany are signatories); while they are non-binding, they have been invoked by U.S. courts as persuasive guidance for tribunals and litigants in cases involving Nazi-looted art. In connection with these principles, the complaint also invokes another story that made the news recently; this summer, it was reported that during the years after World War II, Bavarian officials returned pilfered artworks to families of the very Nazi officials who had wrongly obtained them during the war.  The plaintiffs here cite this as evidence of Bavaria’s longtime reluctance to “confront its responsibility” to make restitution to the families of Jewish victims of the Nazi era.  The complaint heavily criticizes the German government’s allegedly inadequate efforts to live up to the ideals of the Washington Principles and Terezin Declaration in general.  Indeed, plaintiffs specifically recount their efforts to recover various works through certain out-of-court proceedings and tribunals in Germany, and describe how those efforts have been, in their view, inadequately considered, rebuffed or ignored.  Their harsh criticism of these alternative venues for their claims is likely aimed at heading off any potential arguments by Bavaria that the case should be resolved through some other German forum instead of through an American court.
    • The complaint describes several years of negotiations between plaintiffs and the Bavarian authorities, in an apparent effort to avoid any timeliness problems with the case (by showing that the authorities “lulled” the plaintiffs into delaying their suit). Statutes of limitations and laches defenses are a frequent obstacle to claimants in cases like this (a problem that the above-mentioned pending federal legislation seeks to ameliorate).
    We’ll continue to monitor the case, but it seems likely that, as with many other lawsuits involving Nazi-era art transfers, the parties and the court will spend a significant amount of time grappling with complicated threshold legal questions—the FSIA, international comity, and timeliness issues, for example—before even delving into the question of what really happened to these works nearly a century ago.