We’ve written before about a high-profile case involving a Modigliani work, Seated Man with a Cane, which was allegedly taken from Oscar Stettiner, a Jewish art dealer who fled Paris in 1939 as the Nazis took over the city.  Last week, a New York state court judge permitted a representative of his estate to proceed with claims against the work’s current possessors.
 
Like many cases involving Nazi-era art issues, this one has a confusing history.  When Stettiner fled Paris, he left his art collection behind, and it was eventually auctioned by a Nazi-appointed administrator.  Stettiner survived the war, and in 1946, he obtained an order from a French court for the return of the painting—but was unsuccessful in locating the work itself. Stettiner’s family did not know its whereabouts until it turned up in a Sotheby’s auction catalogue in 2008, consigned by Helly Nahmad, a member of a prominent family of art dealers. The work apparently did not sell in 2008, and in 2011, Stettiner’s sole heir, Philippe Maestracci, sued Helly Nahmad’s gallery in a New York federal court (S.D.N.Y. Docket No. 11-cv-7710), seeking the work’s return; he claimed the Nahmads bought it in a 1996 Christie’s auction in which it was advertised with incorrect information.
 
The federal suit was ultimately voluntarily dismissed, for jurisdictional reasons, after it was revealed that the work was not owned by Helly Nahmad’s gallery, but by a different entity, International Art Center (“IAC”).  Stettiner’s estate then tried again, filing suit in New York state court (Sup. Ct. N.Y. Co. Docket No. 650646/2014) against IAC, Helly Nahmad Gallery, and Helly and his father David Nahmad individually.  After the “Panama Papers” leak last spring indicated that IAC is controlled by David Nahmad, David admitted he has indeed owned the work since 1996, but continued to dispute that the work was looted, urging that the work Stettiner lost is a different Modigliani. 
 
The state court case has already been through multiple twists and turns, including an appeal regarding certain preliminary matters.  Most recently, the defendants moved to dismiss the state court action, but last week, that motion proved unsuccessful.  The court first rejected a barrage of threshold arguments.  For example, it held that it has personal jurisdiction over Defendants David Nahmad and IAC, noting, among other things, that IAC had consigned the work to Sotheby’s in New York and sold art through the Helly Nahmad Gallery in New York.  It further held that the plaintiff had made allegations which, if proven, could warrant treating IAC as the alter ego of David Nahmad.  It also rejected the defendants’ argument that it lacked jurisdiction over the work itself, which is not currently in the state; the court held that, as long as it has personal jurisdiction over the defendants themselves, the physical absence of the painting from New York was “of no consequence.”  And it declined to dismiss a related action pending in Surrogate’s Court, or to stay the case pending resolution of that related action. 
 
Further, the defendants had argued that the case should not proceed without the presence of certain other Stettiner descendants; they urged that other Stettiner family members had been shareholders in Stettiner’s art gallery, and the work might have been owned by the gallery entity rather than Oscar Stettiner individually, so the other heirs are necessary parties to this case.  The court was unpersuaded, noting that it had discretion to proceed anyway, and noting that the plaintiff might not have any other effective remedy, while the defendants would not be particularly prejudiced by the absence of the other potential heirs.   
 
The defendants had also argued that the case was time-barred by statutes of limitations under Swiss or French law.  Importantly, the court rejected this argument on the basis of the recently-enacted Holocaust-Era Appropriation Act (“HEAR”), a federal law passed in 2016 regarding timeliness of Nazi-era art claims.  (For another recent case applying that law, see here).  The defendants had argued that, regardless of HEAR, the court should do a conflict of laws analysis to determine whether the statutes of limitation of some other country, not the United States, should apply in the case; the court refused, citing, among other things, a Ninth Circuit decision (see here) that applied HEAR to the timeliness issues in an art case, even where Spanish law applied to some of the other substantive issues in the case.
 
The judge’s decision also announced that, notwithstanding the defendants’ discussions of French and Swiss law, she would apply New York law in general for the remainder of the litigation, noting, among other things, New York’s strong interest in “protecting its valuable art market from plundered goods.”  Relatedly, she rejected the idea that the case should be brought in a different forum, such as the courts of France or Switzerland.
 
The case has now cleared the first hurdle in this litigation, but the defendants’ counsel has indicated that they intend to appeal.  And discovery in the case promises to be no small task, given that many of the key witnesses here are scattered across the globe, including Maestracci, who lives in France and is unable to travel due to poor health.  We’ll continue to monitor the matter, but it’s worth noting that this case represents another important application of the relatively new HEAR Act; after years of having only non-binding resolutions for federal guidance in Nazi-era art cases, courts are finally in the position of having a clear legislative directive that can help clarify at least one difficult issue in some of these cases.  The court’s determination to apply New York law is also significant; as we’ve seen many times before, choice of law is often a major (and sometimes outcome-determinative) issue in cases involving Nazi-era art.  Here, the decision emphasizes New York’s important place in the art world and the court’s sense that New York’s own public policy considerations should govern this dispute.