De Csepel v. Republic of Hungary

• Decision Date: 01 September 2011
• Docket Number: Civil Action No. 10–1261 (ESH).
• Citation: 808 F.Supp.2d 113
• Court: U.S. District Court — District of Columbia
• Parties: David L. DE CSEPEL, et al., Plaintiffs, v. REPUBLIC OF HUNGARY, et al., Defendants.

808 F.Supp.2d 113

David L. DE CSEPEL, et al., Plaintiffs,

v.REPUBLIC OF HUNGARY, et al., Defendants.

Civil Action No. 10–1261 (ESH).

United States District Court, District of Columbia.

Sept. 1, 2011.

Daniel Donohoe Prichard, Michael Dewayne Hays, Dow Lohnes PLLC, Washington, DC, Alycia Regan Benenati, Dorit Ungar, Megan Kathleen Zwiebel, Michael S. Shuster, Sheron Korpus, Kasowitz, Benson, Torres & Friedman LLP, New York, NY, for Plaintiffs.

David D. West, Donald Grayson Yeargin, Sarah Erickson Andre, Thaddeus J. Stauber, Nixon Peabody LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

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 (Szémpmûvészeti 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.

BACKGROUND

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).¹

I. THE HERZOG COLLECTION

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.)

The artworks comprising the Herzog Collection were among the valuable art and other objects looted and seized by Hungary, an ally of Nazi Germany during World War II. (Compl. ¶ 1.) Defendants are currently in possession of at least forty works of art from the Herzog Collection. (Compl. ¶ 2; Opp. at 45.)

II. THE PARTIES

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.)

III. HUNGARY ALLIES WITH NAZI GERMANY AND BEGINS A CAMPAIGN OF GENOCIDE AGAINST HUNGARIAN JEWS

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.)

IV. THE LOOTING OF THE HERZOG COLLECTION

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.)

V. THE HERZOG FAMILY ESCAPES FROM HUNGARY

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.)

VI. THE 1947 PEACE TREATY

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:

Hungary undertakes that in all cases where the property, legal rights or interests in Hungary of persons under Hungarian jurisdiction have, since September 1, 1939, been the subject of measures of sequestration, confiscation or control on account of the racial origin or religion of such persons, the said property, legal rights and interests shall be restored together with their accessories or, if restoration is impossible, that fair compensation shall be made therefor[e].

( Id. art. 27(1).)

VII. THE POST–WAR FATE OF THE HERZOG COLLECTION

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...