A doctrine intended to keep courts from second-guessing official actions of foreign governments was front-and-center during oral arguments Tuesday before a Fifth Circuit panel tasked with deciding whether to revive a lawsuit brought by a family that alleges a work of art sold under duress to a Nazi art dealer in the 1930s belongs to them and not the Museum of Fine Arts, Houston.
The case is centered around who is the rightful owner of a 1753 painting by Bernardo Bellotto called “The Marketplace at Pirna” and pits the MFAH against the heirs of Dr. Max Emden, a German Jewish merchant who is the grandfather of the plaintiffs in this suit and who already owned two Bellotto paintings when he purchased “Marketplace” in 1930. The Fifth Circuit is tasked with deciding whether the act of state doctrine bars courts here from getting involved with what the museum contends was an official restitution decision of the Dutch government made in the wake of World War II.
The heirs have argued that the clerical error that resulted in the museum being in possession of the painting cannot be an “official act,” and therefore there’s no bar on courts here ensuring the painting is restituted to the rightful owners.
Provenance of the Paintings
In 1928, German art dealer and collector Hugo Moser purchased a painting called “After Bellotto” by an unknown imitator of Bellotto’s “Marketplace.”
Two years later, Emden purchased “Marketplace.” He also owned two other Bellotto paintings at that time.
When the Nazis began invading Europe at the beginning of World War II, both Emden and Moser lost possession of their paintings.
Emden sold his three Bellottos in 1938 under “Nazi-orchestrated duress” to Nazi art dealer Karl Haberstock, and Haberstock sold them to the Reich Chancellery. The paintings were earmarked to be displayed in Adolf Hitler’s Führermuseum in Linz, Austria.
Moser, in 1933, fled Germany for the Netherlands. Just before the Nazi invasion of that country, he fled to the United States, leaving “After Bellotto” with an art restorer in Amsterdam.
Without Moser’s permission, his brother-in-law took the painting from the restorer and sold it to Douwes Fine Art, which then sold it to Goudstikker Gallery, which then sold it to Nazi art dealer Maria Almas-Dietrich.
The Monuments Men and Women — a group of curators, art historians, librarians, artists and architects tasked with returning art stolen by the Nazis — discovered the “Marketplace” painting in May 1945 in a salt mine in Austria and transported the painting to Munich to be held until it could be returned to its rightful owner.
After the war, “After Bellotto” was found in a storage facility with many other paintings owned by Almas-Dietrich, and in November 1945 it was moved to Munich to await a return to its rightful owner.
What happened next, the heirs allege, is a clerical error that is the genesis of this litigation.
In March 1946 Dutch officials told the Monuments Men and Women, via a declaration form, that they were looking for Bellotto’s “Marketplace,” which the Goudstikker Gallery claimed to have sold to Nazi dealer Almas-Dietrich.
The problem was that Goudstikker Gallery never owned the actual “Marketplace” painting but instead had been in possession of the knockoff, “After Bellotto.”
But in April 1946, the Monuments Men and Women sent “Marketplace” to the Netherlands.
In May 1948, Moser wrote to Dutch officials explaining he was the rightful owner of “After Bellotto,” which he left in Amsterdam when he fled Nazi occupation. The Dutch government restituted “Marketplace” instead of “After Bellotto” to Moser.
The next year, the Monuments Men and Women realized they had mistakenly given “Marketplace” to the Dutch government, but when it explained that to the Dutch government, officials declined to return the painting because it had already been restituted to Moser.
So, in 1952, Moser sold it to an American collector using what the Emden heirs allege is a “completely fabricated provenance.” One year later that collector, Samuel Kress, placed the artwork on long-term loan with the Museum of Fine Arts, Houston. In 1961 the painting was donated to the museum where it still hangs today.
Emden’s heirs in 2019 were identified by a German commission in charge of restituting stolen war art as the rightful owners of two of the Bellotto paintings Max Emden sold under duress and returned those paintings to them. But “Marketplace,” the third painting, the commission concluded, had been erroneously restituted to the Netherlands “and is now considered lost.”
And, as the Emden heirs argue in this lawsuit, but for the wrongful restitution of “Marketplace” to the Netherlands, all three Bellottos would have been together in Germany and would have been returned to them by the German commission.
History of the Case
The MFAH was notified by the Monuments Men and Women Foundation in the summer of 2021 that the painting on it walls was in fact the actual “Marketplace” painting, but the museum refused restitution of the artwork.
This lawsuit was subsequently filed in October 2021 by the heirs, seeking a declaration they were entitled to the painting and bringing claims for conversion and a violation of the Texas Theft Liabilities Act.
The heirs argue that when the Dutch government gave Moser “Marketplace,” it was “of no effect” because he didn’t have a right of ownership in the painting. Thus Moser could not pass good title to Kress, the American collector, who in turn could not pass good title on to MFAH.
MFAH contends that in order for the court to find the painting belongs to the Emden heirs, it must first invalidate an official action by the Dutch government, which is prohibited by the act of state doctrine.
In April 2023, U.S. District Judge Keith P. Ellison issued an order explaining why the act of state doctrine precluded him from siding with the heirs in this case. He held that the heirs’ argument that the SNK wasn’t an official arm of the Dutch government “ultimately fail as they do not rise above mere conclusionary allegations.” The Netherlands Art Property foundation, which is referred to in court documents by its Dutch name Stichting Nederlands Kunstbezit or “SNK,” was the government agency that handled post-WWII restitution.
Judge Ellison wrote that “reaching into the Dutch government’s post-war restitution system would require sensitive political judgments that would undermine international comity.”
“The court must note that it feels enormous sympathy for plaintiffs,” he wrote. “To lose valuable personal property with strong family connection is always an occasion for anguish. To suffer such a loss as a consequence, however remote, of Nazi influence is a tragedy. Nonetheless, the law is clear and the court cannot displace it.”
The family filed notice of appeal with the Fifth Circuit in May 2023.
Oral Arguments
During Tuesday’s oral arguments, William “Bill” Richmond of Platt Richmond, arguing on behalf of the heirs, said the lawsuit should be revived because Judge Ellison misapplied the act of state doctrine when he dismissed the suit last April.
Richmond argued that because the policies of the U.S. and Dutch governments are “fully supportive of restitution,” returning the painting to the Emdens wouldn’t frustrate international relations.
Judge Jerry E. Smith asked Richmond to clarify his argument that there was no foreign sovereign act taken by the Dutch government in this case.
“Not only was it not an official act because it wasn’t an official act of the Dutch people at the time,” Richmond said. “Even if it was, one official act doesn’t require invalidation.”
Smith asked whether the transportation of the artwork would have been an official act.
“It was an act,” Richmond said. “But whether it was an official act is a different question.”
Richmond explained that’s because the Dutch government in 2001 made a statement that the entity responsible for restituting artwork was a “patchwork of volunteers not actually run by any Dutch official.”
Judge Catharina Haynes expressed concerns about that argument.
“I don’t know that you’ve proven what Dutch law is,” she said.
“To me, this is a question of law of the Netherlands, and that is something we need to know. Let’s say the secretary said something but the king is in charge,” she said. “What if that were the case, or what if we don’t know?”
Richmond said that issue is “what the act of state doctrine wrestles with.”
“While it may be there are competing inferences about how the Dutch viewed SNK … there is not an actual policy concern related to international relations,” he said.
Judge Haynes asked whether the heirs would be able to petition the to the Dutch government in the event that the Fifth Circuit affirmed dismissal of the lawsuit. Richmond said that wasn’t possible because the painting is in the United States.
Judge Smith also questioned the museum’s attorney, Thaddeus J. Stauber of Nixon Peabody, about what the alleged official acts of state were in this case in his view.
Stauber said the Dutch government carried out official acts through the SNK.
“The act was receipt of the artwork,” he said. “The very artwork that is now at the Museum of Fine Arts, Houston. It was that very artwork which was given to the Dutch government by the U.S. government. The second act was the Dutch government, through SNK, handing or delivering … to Hugo Moser. All of those acts occurred within the territory of the Netherlands.”
Judge Haynes asked Stauber to address the argument from the heirs that the 2001 statement by the Dutch government mandates a ruling in their favor.
“As the court points out, the Netherlands is a parliament,” he said. “If it wanted to undo decisions of predecessor governments … it could do so. It could say we revoke all those decisions through parliamentary acts.”
The Emden family is also represented by Alen Samuel of Platt Richmond.
The MFAH is also represented by Aaron M. Brian of Nixon Peabody and Elizabeth Eoff and Richard A. Schwartz of Munsch Hardt Kopf & Harr.
The case number is 23-20224.