461 F.Supp.2d 1157 (C.D.Cal. 2006), CV 05-3459, Cassirer v. Kingdom of Spain

Docket Nº:CV 05-3459-GAF(CTX).
Citation:461 F.Supp.2d 1157
Party Name:Claude CASSIRER, Plaintiff, v. KINGDOM OF SPAIN, et al., Defendants.
Case Date:August 30, 2006
Court:United States District Courts, 9th Circuit, Central District of California
 
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461 F.Supp.2d 1157 (C.D.Cal. 2006)

Claude CASSIRER, Plaintiff,

v.

KINGDOM OF SPAIN, et al., Defendants.

No. CV 05-3459-GAF(CTX).

United States District Court, C.D. California.

Aug. 30, 2006

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Andrew R. Hall, Davis Wright and Tremaine, Los Angeles, CA, Catherine E. Maxson, John A. Reed, Stuart R. Dunwoody, Davis Wright and Tremaine, Seattle, WA, Victor A. Kovner, Davis Wright and Tremaine, New York, NY, for Plaintiff.

Mark E. Beck, Mark Mermelstein, Beck De Corso Daly Kreindler & Harris, Andrew J. Fleming, Michelle Beth Goodman, Thaddeus J. Stauber, Sidley Austin, Los Angeles, CA, William M. Barron, Alston & Bird, New York, NY, for Defendants.

MEMORANDUM AND ORDER REGARDING DEFENDANTS' MOTIONS TO DISMISS

FEESS, District Judge.

I.

INTRODUCTION & BACKGROUND

A. THE LAWSUIT

In the present lawsuit, Plaintiff, the grandson of Lilly Cassirer Neubauer, seeks to recover from the Kingdom of Spain ("Spain") and the Thyssen-Bornemisza Collection Foundation (the "Foundation"), a painting by Camille Pissaro (the "Painting") that the Nazis extorted from his grandmother in 1939 as a condition to issuing her an exit visa. After World War II, the painting changed hands several times, ultimately ending up in the hands of Baron Thyssen-Bornemisza, one of the world's foremost art collectors. In 1988, when the Baron loaned his collection, including the Painting, to Spain under contract, Spain spent millions of dollars to refurbish a state-owned palace, the Villahermosa, and provided it at no charge as the home for the Thyssen-Bornemisza Museum (the "Museum") where the collection was displayed. (Compl.pp 29-30). Spain paid the Baron $50 million for a ten-year lease of the collection, but in 1993 paid an additional $327 million to enable the Foundation to purchase the entire collection. (Id.).

Plaintiff claims that he first learned in 2000 that the Foundation was in possession of the Painting, which he contends was the first information he had regarding its whereabouts since it was taken in 1939. (Id. ¶ 31). In 2001, he petitioned Spain's then Minister of Education, Culture and Sports, Pilar del Castillo Vera, for the Painting's return. Plaintiff's request was refused. (Id. ¶ 32). In July 2003, five United States Congressmen wrote to Minister del Castillo Vera requesting that Spain and the Foundation return the Painting to Cassirer, its rightful owner. (Id. ¶ 33). When del Castillo Vera again refused, Plaintiff filed suit in this Court seeking recovery of the Painting and a variety of other remedies. Plaintiff has never attempted to obtain the Painting through judicial proceedings initiated in Spain.

B. THE MOTIONS TO DISMISS

Defendants now move under Fed.R.Civ.P. ("Rule") 12(b) to dismiss this lawsuit on various procedural grounds. They contend: (1) on the basis of the Foreign Sovereign Immunity Act ("FSIA"), 28 U.S.C. §§ 1602, et seq., that this Court lacks subject matter jurisdiction over the

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dispute; (2) under International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny, that this Court lacks personal jurisdiction over Defendants; and (3) that the Central District of California is not the proper venue for the lawsuit. Spain also moves under Rule 12(b)(6) for dismissal for failure to state a claim. The parties have submitted detailed memoranda and a substantial volume of evidence in support of and in opposition to each of Defendants' motions, which the Court has read and considered. In the interests of brevity and expedition, the Court will confine itself to a relatively brief discussion of the issues and their resolution, since all parties have clearly indicated that those on the losing side wish to present these issues to the Ninth Circuit Court of Appeals as soon as possible. In that regard, the Court is persuaded that this "order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). Therefore, the Court hereby cERTIFIES this matter for interlocutory appeal.

C. THE ISSUE PRESENTED

Although Defendants raise a number of questions subsidiary to the principal issue before the Court, the fundamental question for resolution is whether this Court may properly assert jurisdiction over the present dispute under the "expropriation" or "takings" exception to the FSIA for cases involving property expropriated in violation of international law. 28 U.S.C. § 1605(a)(3).

II.

DISCUSSION

Sovereigns are ordinarily immune from suit in the United States, 28 U.S.C.§ 1604, unless the lawsuit against them falls into one of the statutorily created exceptions to sovereign immunity. Here, Plaintiff contends that this Court has subject matter jurisdiction on the basis of the exception established in 28 U.S.C. § 1605(a)(3), which provides in relevant part that a foreign state or its instrumentality is not immune from suit in any case

in which rights in property taken in violation of international law are in issue and ... that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States.

28 U.S.C. § 1605(a)(3) (emphases added); 28 U.S.C. § 1603(a) (defining "foreign state" to include its agency or instrumentality). Several preliminary issues must be addressed before the Court comes to the principal issue to be decided. These are (1) does this lawsuit present a case or controversy within the meaning of Article III of the United States Constitution; (2) is the Foundation an agency or instrumentality of Spain; (3) must Plaintiff exhaust judicial remedies in the courts of the foreign state in possession of the property as a condition to pursuing his claim in this Court; (4) was the Painting taken by a "sovereign;" and (5) was the Painting taken from a citizen of the expropriating state such that the expropriation exception does not apply.

A. THE PRELIMINARY ISSUES

1. CASE OR CONTROVERSY

Citing to Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), Spain contends that the current

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dispute does not present a "case or controversy" and therefore fails to meet the minimum requirement of Article III for the exercise of federal jurisdiction because Spain did not cause Plaintiff any injury that is "fairly traceable" to its actions, and a judgment will not redress Plaintiff's injury. See Bennett v. Spear, 520 U.S. 154, 162, 117 S.Ct. 1154, 137 L.Ed.2d 281 (1997). But this argument begs the question of whether this Court may properly entertain an action to force Spain to disgorge the painting even though Spain was not involved in the illegal expropriation. On that subject, the Court has already been presented with and decided the issue of whether the phrase "taken in violation of international law" limited the Court's exercise of jurisdiction to sovereigns that had been involved in the initial taking. The Court concluded that the language of the statute contains no such limitation, and the logic of the few decisions that have decided the question teaches that no such limitation should be implied. (See generally Order Granting Mot. for Jurisdictional Discovery, Apr. 27, 2006).

Moreover, Defendants have not disputed that del Castillo Vera was presented with and denied Cassirer's requests that Spain return the Painting to him, (Compl.pp 32-33), which creates a factual dispute as to whether Cassirer or the Foundation owns the Painting. (8/14/06 Hearing Tr. at 38-39). Thus, whether or not Cassirer can ultimately establish an interest in the Painting, whether he can establish that his interest is superior to that of Spain and the Foundation, and whether he can establish a legal basis for vindicating that interest are all matters that must be left for another day. But the fact that such issues must be resolved tends to prove, rather than disprove, the existence of a case or controversy in the present circumstances. Accordingly, under the statute as construed by this Court, a case or controversy arising under federal law is presented and Article III does not preclude the Court from exercising jurisdiction over the case.

2. AGENCY OR INSTRUMENTALITY

The FSIA defines an "agency or instrumentality" of a foreign state as follows:

(b) An "agency or instrumentality of a foreign state" means any entity--

(1) which is a separate legal person, corporate or otherwise, and

(2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and

(3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (e) of this title, nor created under the laws of any third country.

28 U.S.C. § 1603(b). An "agency or instrumentality" of the foreign sovereign, as distinct from the sovereign itself, engages in "core functions" that are predominantly commercial rather than governmental. See Garb v. Republic of Poland, 440 F.3d 579, 591 (2d Cir.2006) (citing Transaero, Inc. v. La Fuerza Aerea Boliviana, 30 F.3d 148, 151 (D.C.Cir.1994) ("[I]mmunity is confined to suits involving the foreign sovereign's public acts, and does not extend to cases arising out of a foreign state's strictly commercial acts.") (citations and quotation marks omitted)).

Spain half-heartedly argues that the Foundation is not an agency or...

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