De Csepel v. Republic Hungary

• Decision Date: 04 June 2013
• Docket Number: Nos. 11–7096,12–7025,12–7026.,s. 11–7096
• Citation: 714 F.3d 591
• Parties: David L. DE CSEPEL, et al., Appellees/Cross–Appellants v. REPUBLIC OF HUNGARY, a Foreign State, et al., Appellants/Cross–Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

714 F.3d 591

David L. DE CSEPEL, et al., Appellees/Cross–Appellants

v.REPUBLIC OF HUNGARY, a Foreign State, et al., Appellants/Cross–Appellees.

Nos. 11–7096, 12–7025, 12–7026.

United States Court of Appeals,District of Columbia Circuit.

Argued Jan. 23, 2013.

Decided April 19, 2013.

Rehearing En Banc Denied June 4, 2013.

Appeals from the United States District Court for the District of Columbia (No. 1:10–cv–01261).

Thaddeus J. Stauber argued the cause for appellants/cross-appellees. With him on the briefs were D. Grayson Yeargin and Sarah E. André. David D. West entered an appearance.

Michael S. Shuster argued the cause for appellees/cross-appellants. With him on the briefs were Dorit Ungar Black, Sheron Korpus, Alycia Regan Benenati, Michael D. Hays, and Daniel D. Prichard. Agnes Peresztegi and Alyssa T. Saunders entered appearances.

Before: TATEL, Circuit Judge, WILLIAMS and SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

As part of the wholesale plunder of Jewish property carried out during the Holocaust, the Hungarian government, acting in collaboration with Nazi Germany, confiscated the “Herzog Collection”—one of Europe's largest and finest private art collections. Plaintiffs, descendants of the Collection's owner, claim that following World War II the Hungarian government entered into bailment agreements with them to retain possession of the Collection and later breached those agreements by refusing to return the artwork. Finding Hungary's bevy of arguments in support of dismissal unpersuasive, we affirm the district court's partial denial of its motion to dismiss. But because we agree with plaintiffs that the district court prematurely dismissed several of their claims on international comity grounds, we reverse that portion of the decision.

I.

Baron Mór Lipót Herzog was a “passionate Jewish art collector in pre-war Hungary” who assembled a collection of more than two thousand paintings, sculptures, and other artworks. Compl. ¶ 38; see Atherton v. District of Columbia Office of Mayor, 567 F.3d 672, 681(D.C.Cir.2009) (in reviewing district court's ruling on motion to dismiss, we accept the complaint's allegations as true). Known as the “Herzog Collection,” this body of artwork was “one of Europe's great private collections of art, and the largest in Hungary,” and included works by renowned artists such as El Greco, Diego Velázquez, Pierre–Auguste Renoir, and Claude Monet. Compl. ¶ 38. Following Herzog's death in 1934 and his wife's shortly thereafter, their daughter Erzsébet and two sons István and András inherited the Collection. Id. ¶ 39.

Then came World War II, and Hungary joined the Axis Powers. In March 1944, Adolf Hitler sent German troops into Hungary, and SS Commander Adolf Eichmann entered the country along with the occupying forces and established headquarters at the Majestic Hotel in Budapest. Id. ¶¶ 51, 60. During this time, Hungarian Jews were subjected to anti-Semitic laws restricting their economic and cultural participation in Hungarian society and deported to German concentration camps. Id. ¶¶ 44, 47, 52. As an integral part of its oppression of Hungarian Jews, “[t]he Hungarian government, including the Hungarian state police, authorized, fully supported and carried out a program of wholesale plunder of Jewish property, stripping anyone ‘of Jewish origin’ of their assets.” Id. ¶ 54. Jews “were required to register all of their property and valuables” in excess of a certain value, and the Hungarian government “inventoried the contents of safes and confiscated cash, jewelry, and other valuables belonging to Jews.” Id. ¶ 55. “[P]articularly concerned with the retention of artistic treasures belonging to Jews,” the Hungarian government established “a so-called Commission for the Recording and Safeguarding of Impounded Art Objects of Jews ... and required Hungarian Jews promptly to register all art objects in their possession.” Id. ¶ 56. “These art treasures were sequestered and collected centrally by the Commission for Art Objects,” headed by the director of the Hungarian Museum of Fine Arts. Id. In response to widespread looting of Jewish property, the Herzogs “attempted to save their art works from damage and confiscation by hiding the bulk of [them] in the cellar of one of the family's factories at Budafok.” Id. ¶ 58. Despite these efforts, “the Hungarian government and their Nazi[ ] collaborators discovered the hiding place” and confiscated the artworks. Id. ¶ 59. They were “taken directly to Adolf Eichmann's headquarters at the Majestic Hotel in Budapest for his inspection,” where he “selected many of the best pieces of the Herzog Collection” for display near Gestapo headquarters and for eventual transport to Germany. Id. ¶ 60. “The remainder was handed over by the Hungarian government to the Museum of Fine Arts for safekeeping.” Id. After seizure of the Collection, a pro-Nazi newspaper ran an article in which the director of the Hungarian Museum of Fine Arts boasted that “[t]he Mór Herzog collection contains treasures the artistic value of which exceeds that of any similar collection in the country.... If the state now takes over these treasures, the Museum of Fine Arts will become a collection ranking just behind Madrid.” Id. ¶ 59.

“Fearing for their lives, and stripped of their property and livelihoods, the Herzog family was forced to flee Hungary or face extermination.” Id. ¶ 63. Erzsébet Herzog (Erzsébet Weiss de Csepel following her marriage) fled Hungary with her children, first reaching Portugal and eventually settling in the United States, where she became a U.S. citizen in 1952. Id. István Herzog was nearly sent to Auschwitz but “escaped after his former sister-in-law's husband ... arranged for him to be put in a safe house under the protection of the Spanish Embassy.” Id. ¶ 42. Several members of his family escaped to Switzerland while others remained in Hungary. Id. ¶ 64. István Herzog died in 1966, leaving his estate to his two sons, Stephan and Péter Herzog, and his second wife, Mária Bertalanffy. Id. ¶ 42. András Herzog was “sent ... into forced labor in 1942 and he died on the Eastern Front in 1943.” Id. ¶ 41. His daughters, Julia Alice Herzog and Angela Maria Herzog, fled to Argentina and eventually settled in Italy. Id. ¶ 64.

Following the end of World War II, the Herzog family began a seven-decade struggle to reclaim the Collection. The complaint alleges that, “[u]pon information and belief,” some pieces of the Herzog Collection remained in Hungary after the war, while others were shipped to Germany or elsewhere. Id. ¶¶ 60–62. As to the artwork remaining in Hungary, “at least forty works of art ... are known to be in the ... possession of the Museum of Fine Arts (Szépmüvészeti Múzeum), Budapest, the Hungarian National Gallery, and the Museum of Applied Arts, Budapest ..., as well as the Budapest University of Technology and Economics.” Id. ¶ 2. According to the complaint, several of these pieces “were being openly exhibited” on the walls of these museums with “tags under the paintings identif[ying] them as ‘From the Herzog Collection.’ ” Id. ¶ 77.

During the Communist era, which began in the late 1940s, “little information could be obtained about the state of the Herzog Collection.” Id. ¶ 75. After the fall of Communism in 1989, Erzsébet Weiss de Csepel, then 89 years old, began negotiations with the Hungarian government for return of the Herzog Collection. Id. ¶ 78. Weiss de Csepel, however, was only able to obtain seven pieces of lesser value, and “[t]he identifiable masterworks remained in the Museum of Fine Arts and the Hungarian National Gallery.” Id. Following Weiss de Csepel's death in 1992, her daughter, Martha Nierenberg, continued negotiating with the Hungarian government for return of the artwork. Id. ¶ 79. In 1999, Martha Nierenberg, seeking return of twelve pieces of the Herzog Collection, filed suit in Hungary. See de Csepel v. Republic of Hungary, 808 F.Supp.2d 113, 125 (D.D.C.2011) (discussing the Hungarian litigation). Shortly after that litigation began, the Museum of Fine Arts returned one painting to her without explanation. Id. Other members of the Herzog family—András's daughters Angela and Julia Herzog, as well as István's sons—later intervened as defendants due to a dispute, now resolved, about which members of the Herzog family owned certain pieces of the Collection. Id. The Budapest Metropolitan Court initially found in Martha Nierenberg's favor, ordering that all but one of the paintings be returned to her. Id. at 126. After several appeals and many more years of litigation, however, the Metropolitan Appellate Court ultimately dismissed the action in 2008. As the district court here explained, the Metropolitan Appellate Court held that “Ms. Nierenberg's claim had been extinguished by [an executive agreement settling certain claims by U.S. nationals against Hungary], and that additional defendants had acquired title through adverse possession.” Id. at 145.

On July 27, 2010, several members of the Herzog family filed this suit in the United States District Court for the District of Columbia against the Republic of Hungary, the Hungarian National Gallery, the Museum of Fine Arts, the Museum of Applied Arts, and the Budapest University of Technology and Economics (collectively “Hungary”), asserting claims for bailment, conversion, constructive trust, accounting, declaratory relief, and restitution based on unjust enrichment. Plaintiffs are David L. de Csepel, a United States citizen who is the grandson of the late Erzsébet Weiss de Csepel, and Angela Maria and Julia Alice Herzog, Italian citizens who are the daughters of the late András Herzog (collectively “the Herzog family”). Id. ¶¶ 6–8. Having “authority to represent all of the Herzog Heirs in this action,” id., plaintiffs seek the return of “at least forty works of art” from the original Herzog Collection still...