Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-09-30717/USCOURTS-ca5-09-30717-0/pdf.json

Parties Involved:
Sarah Blodgett Dunbar
Appellee
Claudia Seger-Thomschitz
Appellant

Document Text:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 09-30717

SARAH BLODGETT DUNBAR,

Plaintiff - Appellee

v.

CLAUDIA SEGER-THOMSCHITZ, Doctor,

Defendant - Appellant

Appeal from the United States District Court

for the Eastern District of Louisiana

Before JONES, Chief Judge, and KING and HAYNES, Circuit Judges.

EDITH H. JONES, Chief Judge:

A painting by Oskar Kokoschka entitled Portrait of Youth (Hans

Reichel)(1910) (“the painting”) is currently in the physical possession of the

Appellee, Sarah Dunbar, in New Orleans, Louisiana. Appellant, Dr. Claudia

Seger-Thomschitz, claims title to the painting, asserting that it was “confiscated”

by the Nazis from her deceased husband’s family. Dunbar sued to quiet title to

the painting based on her ownership by acquisitive prescription under Louisiana

law and the fact that Seger-Thomschitz’s claims were barred by Louisiana’s

prescriptive laws. The district court granted summary judgment in favor of

Dunbar. Segar-Thomschitz now appeals, asserting that this court should invoke

"federal common law authority" to displace Louisiana law and Louisiana law is

United States Court of Appeals

Fifth Circuit

F I L E D

August 20, 2010

Lyle W. Cayce

Clerk

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No. 09-30717

preempted by the foreign policy of the Executive Branch. We reject these

arguments and affirm the judgment of the district court.

I.

Dr. Seger-Thomschitz, the sole heir of Raimund Reichel’s estate, alleges

that the painting was confiscated by the Nazis from Reichel’s father through a

“forced sale” in Vienna, Austria, in 1939. According to Seger-Thomschitz,

Reichel’s father, who was facing increasing Nazi persecution, transferred

ownership of the painting and four other paintings to a Jewish art dealer named

Kallir, an alleged collaborator with the Nazis. When Dunbar’s mother

purchased the painting from Kallir in 1946 in New York, she knew the Reichel

family had owned the painting and knew or should have known that the

painting may have been stolen. Dunbar’s mother, according to the appellant,

had a duty to investigate the painting’s ownership. Dunbar inherited the

painting from her mother in 1973.

After receiving a demand letter from appellant, Dunbar filed suit to quiet

title to the painting. Seger-Thomschitz counterclaimed based on quasi-contract

and unjust enrichment. The district court granted summary judgment in favor

of Dunbar, because Dunbar had obtained title by acquisitive prescription under

Louisiana state law and Seger-Thomschitz’s counterclaims were time-barred by

the applicable Louisiana prescriptive periods. The district court rejected SegerThomschitz’s argument that the Louisiana prescription laws should be

supplanted with “federal common law” to ensure the goals of the federal

Holocaust Victims Redress Act (“HVRA”), Pub. L. No. 105-158, § 202, 112 Stat.

15, 17-18 (1998). The district court noted, inter alia, that the HVRA did not

create a federal common law cause of action or a private right of action. The

district court also found no material factual dispute over Dunbar’s ownership of

the painting, which had been open and continuous for well over ten years,

fulfilling the requirements to establish ownership by acquisitive prescription

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under Louisiana law. Undisputed evidence also established that the Reichel

family sought post-Nazi compensation for other works of art and property, but

not for this painting. The family twice loaned this painting to Kallir for exhibit

and possible sale prior to the Nazi occupation of Austria. Significantly, those

members of the Reichel family with direct knowledge of the painting’s sale never

sought its return.

On appeal, Appellant no longer relies on the HVRA, nor does she question

that Louisiana prescriptive laws were correctly applied. Instead, she argues

that Louisiana law should not be applied at all. Appellant contends that the

court should invoke its “federal common law authority” to displace Louisiana

law, and Louisiana law is preempted by the “Terezin Declaration,” a non-binding

document promulgated at the Prague Holocaust Assets Conference of June 30,

2009.

II.

We review the district court’s grant of summary judgment de novo.

Bridgmon v. Array Sys. Corp., 325 F.3d 572, 576 (5th Cir. 2003). The court of

appeals will not generally consider evidence or arguments that were not

presented to the district court. Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300,

1307 (5th Cir. 1988). Plaintiffs may not advance on appeal new theories or raise

new issues not properly before the district court to obtain reversal of the

summary judgment. Little v. Liquid Air Corp., 37 F.3d 1069, 1071 (5th Cir.

1994)(en banc). The court of appeals will not consider an issue that a party fails

to raise in the district court, absent extraordinary circumstances. North Alamo

Water Supply Corp. v. City of San Juan, Tex., 90 F.3d 910, 916 (5th Cir. 1996).

Extraordinary circumstances exist when the issue involved is a pure question of

law and a miscarriage of justice would result from our failure to consider it. Id.

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III.

A.

Appellant argues, as she did in the district court, that “federal common

law authority” should displace Louisiana law’s prescriptive periods with federal

doctrines of laches and unclean hands to enable claims to recover Naziconfiscated artworks to be decided on their substantive merits. Appellant

asserts that “federal courts displace otherwise applicable state law whenever it

conflicts with or frustrates important federal interests or policies.” No court has

ever adopted what Appellant is urging here—some form of special federal

limitations period governing all claims involving Nazi-confiscated artwork. In

such cases, courts have consistently applied state statutes of limitations. See,

e.g., Orkin v. Taylor, 487 F.3d 734, 741-42 (9th Cir. 2007); Von Saher v. Norton

Simon Mus. of Art at Pasadena, 578 F.3d 1016, 1029-30 (9th Cir. 2009); Detroit

Institute of Art v. Ullin, 2007 WL 1016996, *2 (E.D.Mich. 2007); Toledo Museum

of Art v. Ullin, 477 F. Supp. 2d. 802, 806 (D. Ohio 2006). Further, as this case

is brought under federal diversity jurisdiction, the application of state statutory

limitations periods is controlled by Erie. Erie R.R. v. Tompkins, 304 U.S. 64, 78

(1938); Guaranty Trust Co. v. York, 326 U.S. 99, 108-09 (1945).

With regard to fashioning federal common law, the Supreme Court has

held:

The vesting of jurisdiction in the federal courts does not in and of

itself give rise to authority to formulate federal common law, nor

does the existence of congressional authority under Art. I mean that

federal courts are free to develop a common law to govern those

areas until Congress acts. Rather, absent some congressional

authorization to formulate substantive rules of decision, federal

common law exists only in such narrow areas as those concerned

with the rights and obligations of the United States, interstate and

international disputes implicating the conflicting rights of States or

our relations with foreign nations, and admiralty cases. In these

instances, our federal system does not permit the controversy to be

resolved under state law, either because the authority and duties of

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the United States as sovereign are intimately involved or because

the interstate or international nature of the controversy makes it

inappropriate for state law to control.

Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640-41, 101 S. Ct.

2061, 2067 (1981). Here, no Act of Congress has articulated “rights and

obligations of the United States” in regard to these claims; even the HVRA

creates no individual cause of action. Orkin, 487 F.3d at 739. Where Congress

has not acted, federal courts’ power to displace state law with federal common

law is severely constrained. Further, no interstate or international disputes are

implicated in this controversy that require creation of a uniform federal rule of

law. There is in sum no basis to lay out any federal common law to replace

Louisiana’s prescriptive periods.

B.

For the first time on appeal, Seger-Thomschitz contends that the

application of Louisiana’s prescriptive laws conflicts with and must be

preempted by U.S. foreign policy, most recently articulated in the Terezin

Declaration. The preemption theory she now raises is unrelated to the

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argument for invoking federal common law. Although federal preemption is a

legal issue, Appellant has not met the burden of establishing extraordinary

circumstances to justify consideration of a new legal theory for the first time on

appeal. See North Alamo Water, supra.

Appellant argues that she could not have cited the Terezin Declaration to

the district court because it was issued just a few days before the district court’s

ruling. That the Terezin Declaration was promulgated contemporaneously with

The Terezin Declaration is a “legally non-binding” document promulgated on June 30, 1

2009, at the Prague Holocaust Era Assets Conference organized by the Czech Republic. Fortysix states, including the United States, approved of the document. The Terezin Declaration

recommends that participating countries implement national programs to address real

property confiscated by Nazis, Fascists, and their collaborators and the development of “nonbinding guidelines and best practices for restitution and compensation of wrongfully seized

immovable property.”

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the district court’s order would not have prevented Appellant from citing the

Declaration to the court after it ruled. But more important, the Terezin

Declaration is not crucial to the Appellant’s preemption argument. It is a

“nonbinding executive agreement” that is representative of what Appellant

argues to be the preemptive scope of longstanding U.S. foreign policy. Appellant

thus could have easily raised the preemption theory to the district court based

upon the historical antecedents of the Terezin Declaration, which she avers date

back to 1998. Appellant offered no compelling reason why she failed to present

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this theory to the district court nor does it appear that a miscarriage of justice

will result from our failure to address it. We are unpersuaded that this novel

theory should be explored for the first time on appeal.

C.

Even if we were to consider Appellant’s preemption theory, it is untenable.

Appellant relies principally on American Insurance Association v. Garamendi,

539 U.S. 396, 123 S. Ct. 2374 (2003), to support the argument that the Terezin

Declaration should preempt the Louisiana prescriptive periods. In Garamendi,

California enacted the Holocaust Victim Insurance Relief Act, which required

any insurer that did business in California and that sold insurance policies to

Europe during the Holocaust era to disclose certain information about those

policies to the California State Insurance Commissioner or risk losing its license.

The Supreme Court held the California law was preempted by the implied

dormant foreign affairs power of the President. Id. at 423-24, 123 S. Ct. at 2391-

92. The opinion noted that “resolving Holocaust-era insurance claims that may

be held by residents of this country is a matter well within the Executive’s

responsibility for foreign affairs.” Id. at 420, 123 S. Ct. at 2390. Federal

Appellant’s own evidence on appeal notes thatthe “Terezin Declaration reinforces the 2

Washington Principles.” The Washington Conference Principles on Nazi-Confiscated Art were

promulgated in 1998 as part of the Washington Conference on Holocaust-Era Assets. Fortyfour nations, including the United States, approved these “non-binding principles.”

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preemption prevented the state from pursuing a more aggressive policy than the

President’s foreign policy, as expressed by executive agreements with other

nations and statements by high-level executive officials. Id. at 421-22, 427,

123 S. Ct. at 2390, 2393 (“California seeks to use an iron fist where the President

has consistently chosen kid gloves.”). Significantly, Garamendi found

preemption while acknowledging the absence of either an express federal

preemption clause or a direct conflict between California and federal law.

Garamendi noted, however, that where a state has acted within “its traditional

competence, but in a way that affects foreign relations, it might make good sense

to require a conflict, of a clarity or substantiality that would vary with the

strength or traditional importance of the state concern asserted.” Id. at 420

n.11, 123 S. Ct. at 2390.

Seger-Thomschitz argues that to apply Louisiana’s prescriptive laws would

unconstitutionally intrude on the President’s authority to conduct foreign affairs.

The policy represented by the Terezin Declaration should preempt Louisiana

prescription periods because it expresses a preference to adjudicate claims for

recovery of Nazi-confiscated artworks on their facts and merits. As additional

support, Appellant cites statements by various executive branch officials

expressing concern that such claims were not being adjudicated on the merits

but were barred by statutes of limitations and other defenses.

There are key distinctions between this case and Garamendi. In

Garamendi, California was essentially pursuing independent policy objectives

in favor of Holocaust victims. The existence of its law limited the President’s

ability to exercise his preeminent foreign affairs authority. In this case,

Louisiana has not pursued any policy specific to Holocaust victims or Naziconfiscated artwork. The state’s prescription periods apply generally to any

challenge of ownership to movable property. La. Civ. Code art. 3544 (1870);

La. Civ. Code art. 3506 (1870). Louisiana’s laws are well within the realm of

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traditional state responsibilities. In exercising its strong interest in regulating

the ownership of property within the state through these prescriptive laws,

Louisiana has not infringed on any exclusive federal powers. Indeed, the

Terezin Declaration itself contains language noting that “different legal

traditions” should be taken into account. Appellant presents no proof that U.S.

policy on behalf of Holocaust victims is committed to overriding generally

applicable state property law. The type of preemption established by Garamendi

is thus inapplicable; Louisiana’s prescriptive laws are not preempted by the

Terezin Declaration, U.S. foreign policy, or the President’s foreign affairs

powers.

IV.

For these reasons, we affirm the judgment of the district court is

AFFIRMED.

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