News:

Federal appeals court justices questioned whether a California man should go to courts in Spain and Germany before suing in the U.S. to recover from a Madrid museum a Pissarro painting that was stolen by the Nazis.

A lawyer for 88-year-old Claude Cassirer of Costa Mesa, California, whose grandmother was forced to surrender the painting when she fled Germany in 1939, was asked why his client’s U.S. lawsuit against Spain should go forward when he hadn’t first tried to get the painting back through legal proceedings in Spain and Germany.

A panel of 11 judges of the U.S. Court of Appeals in San Francisco is considering Spain’s appeal of a 2006 ruling by a federal judge in Los Angeles who refused its request to dismiss the case on grounds that foreign governments can’t be sued in this country.

“If the German courts or Spanish courts are open for Mr. Cassirer to go in and say, ‘You took my property, it was taken without compensation’” then “why isn’t that something that has to be exhausted” first, said Chief Judge Alex Kozinski at today’s hearing.

Cassirer sued Spain and Thyssen-Bornemisza Collection Foundation museum in Madrid in 2005 to recover the painting by French impressionist Camille Pissarro. The painting of Rue Saint-Honore in Paris was bought in 1898 by Cassirer’s great- grandfather, who belonged to a wealthy Jewish family. When his grandmother fled Germany in 1939, she was forced to surrender the painting, according to court records.

Exhausting Remedies

Stuart Dunwoody, Cassirer’s attorney, said the appeals court doesn’t have to decide whether his client must first exhaust remedies in Spain and Germany. The taking of the painting was a violation of international law and the court should allow the case to proceed under an exception in a federal law barring such cases, he said. The exception applies to illegally expropriated property even if the country being sued hasn’t broken the law.

“Spain has said if you want it you can sue us,” Dunwoody told the court. “That’s not saying there is a remedy in Spain.”

Cassirer won rulings in federal court in Los Angeles in 2006 and in the appeals court in San Francisco last year that Spain isn’t immune from the case under the exception. In December, the appeals court said a larger panel of judges would rehear the case.

Kozinski, whose parents are Holocaust survivors, said Germany has paid compensation for claims related to its Nazi past, though it can take years.

Dangerous Precedent

Thaddeus Stauber, an attorney for Spain and the museum, said allowing the case to proceed in the U.S. by applying the exception to the Foreign Sovereign Immunities Act would set a dangerous precedent.

“If you do not limit it to the violator of the law, and apply it to any country that comes across stolen goods a hundred years after the fact, that will completely eviscerate the Foreign Sovereign Immunities Act and open up U.S. courts” to all kinds of lawsuits, Stauber told the justice today. The court didn’t say when it would issue a ruling.

After World War II, the painting was sold at least three times before ending up with the collection of Baron Hans- Heinrich Thyssen-Bornemisza. Spain acquired the collection in 1993.

Cassirer, a retired portrait photographer, unsuccessfully petitioned the Spanish government to return the painting.

The case is Cassirer v. Kingdom of Spain, 06-56325, U.S. Courts of Appeals for the Ninth Circuit (San Francisco).

--With reporting assistance by Edvard Pettersson in Los Angeles. Editors: Michael Hytha, Douglas Wong.

To contact the reporter on this story: Karen Gullo in Chicago at kgullo@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net