Sarah Dunbar v. Claudia Seger-Thomschitz

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Sarah Dunbar v. Claudia Seger-Thomschitz

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Case: 09-30717

Document: 00511210919

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Date Filed: 08/20/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
N o . 09-30717 August 20, 2010 Lyle W. Cayce Clerk S A R A H BLODGETT DUNBAR, P la in t iff - Appellee v. C L A U D I A SEGER-THOMSCHITZ, Doctor, D e fe n d a n t - Appellant

A p p e a l from the United States District Court fo r the Eastern District of Louisiana

B e fo r e JONES, Chief Judge, and KING and HAYNES, Circuit Judges. E D I T H H. JONES, Chief Judge: A painting by Oskar Kokoschka entitled Portrait of Youth (Hans R e ic h e l)(1 9 1 0 ) ("the painting") is currently in the physical possession of the A p p e lle e , Sarah Dunbar, in New Orleans, Louisiana. Appellant, Dr. Claudia S e g er-T h o m sch itz, claims title to the painting, asserting that it was "confiscated" b y the Nazis from her deceased husband's family. Dunbar sued to quiet title to t h e painting based on her ownership by acquisitive prescription under Louisiana la w and the fact that Seger-Thomschitz's claims were barred by Louisiana's p r e s c r ip t iv e laws. The district court granted summary judgment in favor of D u n b a r . Segar-Thomschitz now appeals, asserting that this court should invoke "federal common law authority" to displace Louisiana law and Louisiana law is

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Case: 09-30717

Document: 00511210919

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Date Filed: 08/20/2010

No. 09-30717 p r e e m p t e d by the foreign policy of the Executive Branch. a r g u m e n t s and affirm the judgment of the district court. I. D r . Seger-Thomschitz, the sole heir of Raimund Reichel's estate, alleges t h a t the painting was confiscated by the Nazis from Reichel's father through a " fo r c e d sale" in Vienna, Austria, in 1939. According to Seger-Thomschitz, We reject these

R e ic h e l's father, who was facing increasing Nazi persecution, transferred o w n e r s h ip of the painting and four other paintings to a Jewish art dealer named K a llir , an alleged collaborator with the Nazis. When Dunbar's mother

p u r c h a s e d the painting from Kallir in 1946 in New York, she knew the Reichel fa m ily had owned the painting and knew or should have known that the p a in tin g may have been stolen. Dunbar's mother, according to the appellant, h a d a duty to investigate the painting's ownership. p a in tin g from her mother in 1973. A fte r receiving a demand letter from appellant, Dunbar filed suit to quiet t it le to the painting. Seger-Thomschitz counterclaimed based on quasi-contract a n d unjust enrichment. The district court granted summary judgment in favor o f Dunbar, because Dunbar had obtained title by acquisitive prescription under L o u is ia n a state law and Seger-Thomschitz's counterclaims were time-barred by t h e applicable Louisiana prescriptive periods. The district court rejected SegerT h o m s c h it z 's argument that the Louisiana prescription laws should be s u p p la n t e d with "federal common law" to ensure the goals of the federal H o lo c a u s t Victims Redress Act ("HVRA"), Pub. L. No. 105-158, § 202, 112 Stat. 1 5 , 17-18 (1998). The district court noted, inter alia, that the HVRA did not c r e a t e a federal common law cause of action or a private right of action. The d is t r ic t court also found no material factual dispute over Dunbar's ownership of t h e painting, which had been open and continuous for well over ten years, fu lfillin g the requirements to establish ownership by acquisitive prescription 2 Dunbar inherited the

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No. 09-30717 u n d e r Louisiana law. Undisputed evidence also established that the Reichel fa m ily sought post-Nazi compensation for other works of art and property, but n o t for this painting. The family twice loaned this painting to Kallir for exhibit a n d possible sale prior to the Nazi occupation of Austria. Significantly, those m e m b e r s of the Reichel family with direct knowledge of the painting's sale never s o u g h t its return. O n appeal, Appellant no longer relies on the HVRA, nor does she question t h a t Louisiana prescriptive laws were correctly applied. Instead, she argues t h a t Louisiana law should not be applied at all. Appellant contends that the c o u r t should invoke its "federal common law authority" to displace Louisiana la w , and Louisiana law is preempted by the "Terezin Declaration," a non-binding d o c u m e n t promulgated at the Prague Holocaust Assets Conference of June 30, 2009. II. W e 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 a p p e a ls will not generally consider evidence or arguments that were not p r e s e n t e d to the district court. Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300, 1 3 0 7 (5th Cir. 1988). Plaintiffs may not advance on appeal new theories or raise n e w issues not properly before the district court to obtain reversal of the s u m m a r y judgment. Little v. Liquid Air Corp., 37 F.3d 1069, 1071 (5th Cir. 1 9 9 4 )(e n banc). The court of appeals will not consider an issue that a party fails t o raise in the district court, absent extraordinary circumstances. North Alamo W a te r 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 la w and a miscarriage of justice would result from our failure to consider it. Id.

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No. 09-30717 III. A. A p p e lla n t argues, as she did in the district court, that "federal common la w authority" should displace Louisiana law's prescriptive periods with federal d o c t r i n e s of laches and unclean hands to enable claims to recover Nazic o n fis c a t e d artworks to be decided on their substantive merits. Appellant

a s s e r t s that "federal courts displace otherwise applicable state law whenever it c o n flic ts with or frustrates important federal interests or policies." No court has e v e r adopted what Appellant is urging here--some form of special federal lim it a t io n s period governing all claims involving Nazi-confiscated artwork. In s u c h 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 S im o n Mus. of Art at Pasadena, 578 F.3d 1016, 1029-30 (9th Cir. 2009); Detroit I n s titu te of Art v. Ullin, 2007 WL 1016996, *2 (E.D.Mich. 2007); Toledo Museum o f 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 lim it a t io n s periods is controlled by Erie. Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1 9 3 8 ); Guaranty Trust Co. v. York, 326 U.S. 99, 108-09 (1945). W it h regard to fashioning federal common law, the Supreme Court has h e ld : T h e vesting of jurisdiction in the federal courts does not in and of it s e lf give rise to authority to formulate federal common law, nor d o e s the existence of congressional authority under Art. I mean that f e d e r a l courts are free to develop a common law to govern those a r e a s until Congress acts. Rather, absent some congressional a u t h o r i z a t io n to formulate substantive rules of decision, federal c o m m o n law exists only in such narrow areas as those concerned w it h the rights and obligations of the United States, interstate and in t e r n a t io n a l disputes implicating the conflicting rights of States or o u r relations with foreign nations, and admiralty cases. In these in s t a n c e s , our federal system does not permit the controversy to be r e s o lv e d under state law, either because the authority and duties of 4

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No. 09-30717 t h e United States as sovereign are intimately involved or because t h e interstate or international nature of the controversy makes it in a p p r o p r ia t e for state law to control. T e x a s Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 640-41, 101 S. Ct. 2 0 6 1 , 2067 (1981). Here, no Act of Congress has articulated "rights and

o b lig a t io n s of the United States" in regard to these claims; even the HVRA c r e a t e s no individual cause of action. Orkin, 487 F.3d at 739. Where Congress h a s not acted, federal courts' power to displace state law with federal common la w is severely constrained. Further, no interstate or international disputes are im p lic a t e d in this controversy that require creation of a uniform federal rule of la w . There is in sum no basis to lay out any federal common law to replace L o u is ia n a 's prescriptive periods. B. F o r the first time on appeal, Seger-Thomschitz contends that the a p p lic a t io n of Louisiana's prescriptive laws conflicts with and must be p r e e m p t e d by U.S. foreign policy, most recently articulated in the Terezin D e c la r a t io n .1 The preemption theory she now raises is unrelated to the

a r g u m e n t for invoking federal common law. Although federal preemption is a l e g a l issue, Appellant has not met the burden of establishing extraordinary c ir c u m s t a n c e s to justify consideration of a new legal theory for the first time on a p p e a l. See North Alamo Water, supra. A p p e lla n t argues that she could not have cited the Terezin Declaration to t h e district court because it was issued just a few days before the district court's r u lin g . That the Terezin Declaration was promulgated contemporaneously with
The Terezin Declaration is a "legally non-binding" document promulgated on June 30, 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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No. 09-30717 t h e district court's order would not have prevented Appellant from citing the D e c la r a t io n to the court after it ruled. But more important, the Terezin It is a

D e c la r a t io n is not crucial to the Appellant's preemption argument.

" n o n b in d in g executive agreement" that is representative of what Appellant a r g u e s to be the preemptive scope of longstanding U.S. foreign policy. Appellant t h u s could have easily raised the preemption theory to the district court based u p o n the historical antecedents of the Terezin Declaration, which she avers date b a c k to 1998.2 Appellant offered no compelling reason why she failed to present t h is theory to the district court nor does it appear that a miscarriage of justice w ill result from our failure to address it. We are unpersuaded that this novel t h e o r y should be explored for the first time on appeal. C. E v e n if we were to consider Appellant's preemption theory, it is untenable. Appellant relies principally on American Insurance Association v. Garamendi, 5 3 9 U.S. 396, 123 S. Ct. 2374 (2003), to support the argument that the Terezin D e c la r a t io n should preempt the Louisiana prescriptive periods. In Garamendi, C a lifo r n ia enacted the Holocaust Victim Insurance Relief Act, which required a n y insurer that did business in California and that sold insurance policies to E u r o p e during the Holocaust era to disclose certain information about those p o lic ie s to the California State Insurance Commissioner or risk losing its license. The Supreme Court held the California law was preempted by the implied d o r m a n t foreign affairs power of the President. Id. at 423-24, 123 S. Ct. at 23919 2 . The opinion noted that "resolving Holocaust-era insurance claims that may b e held by residents of this country is a matter well within the Executive's r e s p o n s ib ilit y for foreign affairs."
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Id. at 420, 123 S. Ct. at 2390.

Federal

Appellant's own evidence on appeal notes that the "Terezin Declaration reinforces the 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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No. 09-30717 p r e e m p t io n prevented the state from pursuing a more aggressive policy than the P r e s id e n t 's foreign policy, as expressed by executive agreements with other n a t io n s and statements by high-level executive officials. Id. at 421-22, 427, 1 2 3 S. Ct. at 2390, 2393 ("California seeks to use an iron fist where the President h a s consistently chosen kid gloves."). Significantly, Garamendi found express federal

p r e e m p t io n while acknowledging the absence of either an

p r e e m p t io n clause or a direct conflict between California and federal law. Garamendi noted, however, that where a state has acted within "its traditional c o m p e t e n c e , but in a way that affects foreign relations, it might make good sense t o require a conflict, of a clarity or substantiality that would vary with the s t r e n g t h or traditional importance of the state concern asserted." Id. at 420 n .1 1 , 123 S. Ct. at 2390. S eger-T h om sch itz argues that to apply Louisiana's prescriptive laws would u n con stitu tio n a lly intrude on the President's authority to conduct foreign affairs. The policy represented by the Terezin Declaration should preempt Louisiana p r e s c r ip t io n periods because it expresses a preference to adjudicate claims for r e c o v e r y of Nazi-confiscated artworks on their facts and merits. As additional s u p p o r t , Appellant cites statements by various executive branch officials e x p r e s s in g concern that such claims were not being adjudicated on the merits b u t were barred by statutes of limitations and other defenses. T h e r e are key distinctions between this case and Garamendi. In

G a r a m e n d i, California was essentially pursuing independent policy objectives in favor of Holocaust victims. The existence of its law limited the President's a b ility to exercise his preeminent foreign affairs authority. In this case,

L o u is ia n a has not pursued any policy specific to Holocaust victims or Nazic o n fis c a t e d artwork. The state's prescription periods apply generally to any c h a lle n g e of ownership to movable property. La. Civ. Code art. 3544 (1870); L a . Civ. Code art. 3506 (1870). Louisiana's laws are well within the realm of 7

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No. 09-30717 t r a d it io n a l state responsibilities. In exercising its strong interest in regulating t h e ownership of property within the state through these prescriptive laws, L o u is ia n a has not infringed on any exclusive federal powers. Indeed, the

T e r e z in Declaration itself contains language noting that "different legal t r a d it io n s " should be taken into account. Appellant presents no proof that U.S. p o lic y on behalf of Holocaust victims is committed to overriding generally a p p lica b le state property law. The type of preemption established by Garamendi is thus inapplicable; Louisiana's prescriptive laws are not preempted by the T e r e z in Declaration, U.S. foreign policy, or the President's foreign affairs pow ers. IV . F o r these reasons, we affirm the judgment of the district court is A F F IR M E D .

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