[CPProt.net] [Fwd: Cassirer v. Hahn] Nazis had looted treasured pieces

[museum-security (FTP)]

Subject: Cassirer v. Hahn
From: "E. Randol Schoenberg" <randols at bslaw.net>
Date: Thu, January 20, 2005 2:20 am
To: "E. Randol Schoenberg" <randols at bslaw.net>

Tentative Ruling Detail

Judge Denise deBellefeuille
Department 6 - SB-Anacapa
1100 Anacapa Street
P.O. Box 21107
Santa Barbara, CA  93121-1107
     CIVIL LAW & MOTION
     Case Number:      1158698
     Caption:
    Claude Cassirer et al vs Stephen Hahn
     Hearing Date:     Thursday, January 20, 2005   9:30:00 AM
Defendant¹s Demurrer to Complaint is OVERRULED.  Defendant shall
answer within 20 days.

(1) Constructive trust a remedy.  While defendant is correct that a
constructive trust is a remedy and not a cause of action, it does not
necessarily follow that the demurrer must be sustained.  A constructive
trust is an equitable remedy that may be imposed in practically any case
in which there has been a wrongful acquisition or detention of property to
which another is entitled, in order to prevent unjust enrichment.  The
court is aware of no authority which states that a claim seeking such
remedy cannot be entitled ³complaint for imposition of constructive trust.
 (See, e.g., 49-560 California Forms of Pleading and Practice Form 112.)

(2) Whether constructive trust pled.  Under CC §§2223 and 2224, a
constructive trust may be imposed when the following conditions are
satisfied: (1) the existence of property or some interest in property,
(2) plaintiff¹s right to that property, and (3) defendant¹s wrongful
acquisition or detention of the property.  (Burlesci vs. Petersen  (1998) 68
Cal.App.4th 1062, 1069.)

Here, plaintiffs have pled only that defendant, who conducts business
under the name of Stephen Hahn Gallery, sold two Nazi-looted paintings
by world- renowned artists Camille Pissarro and Pablo Picasso in 1975
and 1976 without the consent of the legal owners and kept the profits.
Plaintiff Cassirer specifically alleges that it is unknown how Hahn
acquired the Pissaro. Plaintiff Bennigson alleges as to the acquisition of
the Picasso only that Hahn purchased the painting from an art dealer in
Paris.

The key issue is whether these allegations are sufficient allegations of
³accident,² ³mistake,² ³or other wrongful act² under CC §§2223 and 2224.
It has been held that these code sections state general principles for a
court¹s guidance rather than restrictive rules.  (Martin vs. Kehl (1983) 145
Cal.App.3d 228, 237.)  It has also been held that the wrongful act giving
rise to a constructive trust need not amount to fraud or intentional
misrepresentation, and that all that must be shown is that the acquisition
of the property was wrongful and the keeping of the property by the
defendant would constitute unjust enrichment.  (Calistoga Civic Club vs.
Calistoga (1983) 143 Cal.App.3d 111, 116.)

The paintings at issue were at the time of the alleged sales unique,
presumably well known art objects of significant historical and artistic
importance.  Were they otherwise, it would be difficult for the court to
find sufficient the minimal allegations concerning ³wrongful acts.² 
However,because of the unique and famous nature of the paintings (and the
fact that it was well known in the art world that the Nazis had looted
treasured pieces), the court does not believe that it can be said as a
matter of law, at this the pleading stage, that the sale of stolen art
works by famous artists is insufficient allegation of a ³wrongful² act
under the Civil Code.

(3) Allegation of ³specific identifiable property.²  While defendant is
correct that specific identifiable property is a prerequisite, the
allegations do not appear insufficient as a matter of law.

Here, plaintiffs allege that the paintings were sold some thirty years
ago, and that they are entitled to a constructive trust on defendant¹s
³assets.²

When one acquires proceeds from the sale of property belonging to
another, the imposition of a constructive trust on the proceeds is a
proper remedy. Moreover, ³wide play² is left to the court in formulating
its equitable decree, so that justice may effectively be carried out. 
(Rivero vs. Thomas (1948)86 Cal.App.2d 225, 238.)  In addition, courts
have recognized the right of a beneficiary under a constructive trust to
obtain a money judgment in lieu of destroyed trust property and to recover
the value of trust property commingled by a constructive trustee with the
trustee¹s own property, so that the identify of the trust property could
no longer be traced.  (Elliott vs. Elliott (1964) 231 Cal.App.2d 205,
209-210, citing Noble vs. Noble (1926) 198 Cal. 129,132.)

(4) SOL.  Plaintiffs allege that this action is brought pursuant to CCP
§354.3 and argue that this code section applies to their alleged
circumstances. However, §354.3 expressly provides that any owner or heir
or beneficiary of an owner of Holocaust-era artwork may bring an action to
recover Holocaust- era artwork from an ³entity.²  Absent authority, the
statute does not by its terms apply to this situation to impose a
constructive trust on the proceeds from the sale of artworks.

The dispositive issue appears to the court to be whether CCP §361,
California¹s borrowing statute, bars the claims under New York law.
§361 provides that when a cause of action has ³arisen² in another state,
if the other state¹s limitations period has expired, plaintiff may not
maintain the action in this state.

Assuming that plaintiffs¹ causes of action ³arose² in New York, and
assuming that New York¹s statute of limitations has expired, §361 has an
exception for a California citizen who held the cause of action from the
time it ³accrued.²

The key question appears to be which state¹s law determines when the
cause of action ³accrued.²  The court has located no authority directly
on point, but notes that in Cossman vs. DaimlerChrysler Corporation
(2003) 108 Cal.App.4th 370, where the court found that Indiana law
barred the action, the court looked at California law to determine when
the cause of action arose/accrued.  (Cossman, supra at 377.)  This result
appears to be consistent with the apparent purpose of the exception in
§361 of allowing California¹s residents the benefit of this state¹s longer
SOL
when it exists.

Under CCP §338(c), the SOL for an action for taking or detaining any
goods (including an action for their recovery) is three years; if the
article is stolen, the cause of action accrues on discovery of the
article¹s whereabouts. This is the rule even in the case of an innocent
third party purchaser of stolen property.
(Naftzger vs. American Numismatic Society (1996) 42 Cal.App.4th 421.)

Thus, the SOL for this action for the detaining of the allegedly stolen
paintings is three years from discovery of the location of the
paintings. The complaint alleges the location of the Pissarro ³in the last
several years² and the Picasso in 2002, and that both plaintiffs have been
California residents at least since 2001 (Mr. Cassirer for 25 years). 
Thus, since the actions accrued under California law ³in the last several
years² for the Pissarro and in 2002 for the Picasso, and since each
plaintiff has been a resident at least since that time,it cannot be said
as a matter of law that either action is barred.

The court notes that the result is the same under the ³governmental
interest analysis² approach, which applies where there is a conflict of
law between two states.  In the SOL situation, this approach would
appear to apply only to the situation where California has a shorter SOL,
not to the situation in this case, where California has a longer SOL than
another state, because in that situation California¹s statutory law (§361)
applies.

Under the governmental interest analysis, in general the forum state
applies its own law unless a litigant demonstrates that applying the law
of another state would further the interest of the other state.  There
are three steps: (1) The court determines whether the foreign law differs
from that of the forum. (2) If there is a difference, the court examines
each jurisdiction¹s interest in the application of its own law to
determine whether a ³true conflict² exists.
When both jurisdictions have a legitimate interest in the application of
its rule of decision, (3) the court analyzes the ³comparative impairment¹
of the interested jurisdictions, and applies the law of the state whose
interest would be more impaired if its law were not applied.  (Tucci vs.
Club Mediterranee,S.A. (2001) 89 Cal.App.4th 180, 189.)

Here, only California appears to have an ³interest² in the application
of its SOL.  It is the forum, and all parties are California residents.
Applying its SOL would advance its underlying policy.  New York has no
interest in having its SOL applied because there are no New York
defendants, and it is not the forum.  (See Ashland Chemical Company vs.
Provence (1982) 129 Cal.App.3d 790, 794.)  Thus, there is a no true
conflict of laws, and California¹s SOL, §338(c), would apply.

 


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