Emden v. Museum of Fine Arts

103 F.4th 308

Juan Carlos EMDEN; Nicolas Emden; Michel Emden, Plaintiffs—Appellants, v. The MUSEUM OF FINE ARTS, HOUSTON, Defendant—Appellee.

No. 23-20224

United States Court of Appeals, Fifth Circuit

FILED May 29, 2024

Appeal from the United States District Court for the Southern District of Texas, USDC No. 4:21-CV-3348, Keith P. Ellison, U.S. District Judge

William S. Richmond (argued), Alen Samuel, Platt Richmond, P.L.L.C., Dallas, TX, for Plaintiffs—Appellants.

Thaddeus J. Stauber (argued), Aaron M. Brian, Nixon Peabody, L.L.P., Los Angeles, CA, Elizabeth Frances Eoff, Richard A. Schwartz, Esq., Munsch Hardt Kopf & Harr, P.C., Houston, TX, for Defendant—Appellee.

Before Smith, Haynes, and Douglas, Circuit Judges.

Jerry E. Smith, Circuit Judge:

In the years leading up to World War II, the Nazis' persecution of European Jews forced Max Emden to sell his three Bernardo Bellotto replica paintings. After the war, the Monuments Men found those paintings in a salt mine in Austria and began the restitution process.¹ One was shipped to the Netherlands to fulfill a claim forwarded by the Dutch Art Property Foundation (the "SNK") from a gallery in Amsterdam. But the SNK omitted one key detail: Bernard Bellotto had not painted the gallery's version.

Failing to recognize that it had received the wrong painting, the SNK adjudicated the competing claims of the gallery and of a former Netherlands resident. It determined that the latter's claim was stronger and shipped the painting to him in the United States. The painting eventually made its way to the Museum of Fine Arts in Houston (the "Museum"), where it resides.

Plaintiffs—Juan Carlos Emden, Nicolas Emden, and Michel Emden (collectively, the "Emdens")—are Max Emden's heirs, seeking to recover the painting. The district court dismissed their claim because of the act of state doctrine, reasoning that any evaluation would require it to question an action of the Dutch government—a foreign state. It would, and that is precisely what the act of state doctrine prohibits, so we affirm the dismissal.

I.

A. Pre-and Intra-War

The dispute centers on two paintings—one owned by Max Emden and one by Hugo Moser—recovered from the Nazis after World War II.

1. Emden

Emden owned three paintings by Bernardo Bellotto, including a c. 1764 replica of Belloto's The Marketplace at Pirna. Because Bellotto had painted Emden's replica himself, it is known in art parlance as a "By Bellotto."

As they ascended to power, the Nazis persecuted and restricted Jews throughout Germany, pursuing even those non-residents who merely owned businesses or property there. Facing Nazi-induced financial distress, Emden was forced to part with his three paintings, selling them—at below-market prices—to an art dealer, who immediately resold them to the Reichskanzlei (Reich Chancellery) for inclusion in the Führermuseum.

2. Moser

Moser was a German art dealer and collector who purchased a replica of The Marketplace at Pirna in 1928. Though his copy was originally sold as a "By Bellotto," an unknown artist—not Bellotto—had painted it. Moser's copy is therefore known, in art parlance, as an "After Bellotto."

Moser fled Germany for the Netherlands when the Nazis came to power in 1933, bringing his After Bellotto Pirna with him. Several years later, just ahead of the Nazi invasion, he fled the Netherlands, leaving the painting with an art restorer in Amsterdam. The painting then made its way to the Goudstikker Gallery, from which a Nazi art dealer purchased it for Hitler's Führermuseum in 1942.

B. Post-War

In 1945, the Monuments Men found Emden's three Bellotto paintings in a salt mine in Austria. Six months later, they recovered Moser's After Bellotto Pirna from a storage facility. The Monuments Men transferred all four paintings to the Munich Central Collecting Point ("MCCP") and analyzed each painting, attempting to ascertain each's artist, subject matter, and condition.

Under official American policy, the Monuments Men returned "readily identifiable" art to claimants through their respective allied governments.² In the Netherlands, those claims were received and processed by the SNK—a foundation created by the Dutch government. Though the SNK served as a repository for returned artwork, the Dutch government never decreed that the SNK owned the artworks in its possession.³

After receiving a claim from the Goudstikker Gallery for the After Bellotto Pirna, the SNK submitted a request to the MCCP. Crucially, though, the SNK's request did not specify which version of the painting the Gallery had claimed. Instead, it merely referred to the Pirna as one "by" Bellotto. With only one By Bellotto Pirna at the MCCP, the Monuments Men responded to the SNK's request by shipping Emden's painting.

Upon its arrival in the Netherlands, Dutch Lieutenant Colonel Vorenkamp signed a custody receipt confirming its delivery to the SNK.⁴ But, before it could restitute the painting to the Gallery, the SNK received a conflicting claim from Moser. After adjudicating the conflict in Moser's favor, the SNK shipped him what it believed was the After Bellotto Pirna—which was, in actuality, Emden's By Bellotto Pirna.⁵

It was not until 1949 that the Monuments Men discovered their error—they had sent Emden's By Bellotto Pirna to fulfill a claim for Moser's After Bellotto Pirna. The Monuments Men requested the Netherlands to return the painting, but it was too late: The painting was no longer in the SNK's custody, and the Dutch government had begun winding down the entire foundation. So, the request went unfulfilled.

C. Modern Restitution Efforts

In recent years, the Emdens have attempted to restitute all three Bellotto paintings.

In 2019, the German Advisory Commission on the Return of Cultural Property Seized as a Result of Nazi Persecution, Especially Jewish Property (the "Commission"), reviewed the Emdens' claim for restitution of the other two Bellotto paintings. The Commission's detailed ruling was unequivocal: The Nazis had caused Emden's financial hardship, forcing him to sell the paintings. Additionally, the Commission concluded that the Monuments Men had erroneously restituted Emden's By Bellotto Pirna to the Netherlands.

Perceiving the Commission's conclusion as confirming Max Emden's ownership of the painting at the Museum, the Emdens sued the Museum. The district court dismissed their first complaint without prejudice, relying on the act of state doctrine.⁶ Though their amended complaint attributed more of the errors to the SNK than to the Dutch government, the court again applied the act of state doctrine, this time dismissing with prejudice.⁷

II.

A. Standard of Review

We review a Federal Rule of Civil Procedure 12(b)(6) dismissal under the act of state doctrine de novo. Spectrum Stores, Inc. v. Citgo Petro. Corp., 632 F.3d 938, 948 (5th Cir. 2011) (citing Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir. 2008)). "In undertaking this review, we take the well-pled factual allegations of the complaint as true and view them in the light most favorable to the plaintiff.' " Id. (quoting Lane, 529 F.3d at 557).⁸ Still, the plaintiff must "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Upon a party's providing notice of an issue concerning the laws of a foreign state, we "may consider any relevant material or source"— including those "not submitted by a party"—about that foreign state's laws. FED. R. CIV. P. 44.1; see also Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 713 (5th Cir. 1999).

B. Act of State Doctrine

A judicial creation rooted in separation-of-powers principles, the act of state doctrine bars American courts from "sit[ting] in judgment on the acts of the government of another [state], done within its own territory."⁹ It "limits, for prudential rather than jurisdictional reasons, the adjudication in American courts of the validity of a foreign sovereign's public acts."¹⁰ The doctrine "is a vital rule of judicial abstention in the field of foreign relations."¹¹ That is because "juridical review of acts of state of a foreign power could embarrass the conduct of foreign relations by the political branches of the government."¹²

The act of state doctrine applies "even if the defendant is a private party, not an instrumentality of a foreign state, and even if the suit is not based specifically on a sovereign act."¹³ When applicable, it "provides . . . a substantive defense on the merits."¹⁴

III.

The Emdens contend that the By Bellotto Pirna belongs to them because Moser never obtained good title to it. Passing judgment on the merits of that claim requires us first to resolve whether the act of state doctrine applies. Specifically, we must determine whether the SNK's transmission of the painting was an act of the Dutch government.¹⁵

According to the Emdens, the act of state doctrine does not apply for four reasons: First, there was no act of state because the SNK believed it was restituting the After Bellotto Pirna. Second, the SNK illegitimately, and therefore, necessarily, unofficially delivered the By Bellotto Pirna to Moser. Third, U.S. and Dutch foreign policy favors restituting stolen art. Fourth, the Dutch government's acts did not occur exclusively within its territorial boundaries.

We reject each of those theories. First, the SNK's shipping of the misidentified painting is an act of state. Second, the foundation had sufficient governmental trappings—and has been recognized as an official actor—such that we cannot call its actions unofficial. Third, the prudential concerns laid out in Banco Nacional tilt in favor of finding an implied negative foreign relations impact. Fourth, all the actions necessary to transfer the painting to Moser occurred within the Netherlands. Therefore, the district court properly applied the act of state doctrine.

A. Wh...