Petition for Writ of Certiorari — David Cassirer, et al., Petitioners v. Thyssen-Bornemisza Collection Foundation

No. 24In the

Supreme Court of the United States

DAVID CASSIRER, et al.,

Petitioners,

v.

THYSSEN-BORNEMISZA COLLECTION

FOUNDATION, an agency or instrumentality of the

Kingdom of Spain,

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Ninth Circuit

SUPPLEMENTAL APPENDIX

Stephen N. Zack

Boies Schiller Flexner LLP

100 SE Second Street,

Suite 2800

Miami, FL 33131

Samuel J. Dubbin, P.A.

Dubbin & Kravetz, LLP

1200 Anastasia Avenue,

Suite 300

Coral Gables, FL 33134

Laura W. Brill

Kendall Brill & Kelly LLP

10100 Santa Monica Boulevard

Los Angeles, CA 90067

David Boies

Counsel of Record

Boies Schiller Flexner LLP

333 Main Street

Armonk, NY 10504

(914) 749-8200

dboies@bsfllp.com

David A. Barrett

Boies Schiller Flexner LLP

55 Hudson Yards

New York, NY 10001

Scott E. Gant

Boies Schiller Flexner LLP

1401 New York Avenue, NW

Washington, DC 20005

Counsel for Petitioners

335064

i

TABLE OF APPENDICES

Page

SUPPLEMENTAL APPENDIX — OPINION

OF THE U.S. DISTRICT COURT FOR THE

CENTRAL DISTRICT OF CALIFORNIA

(APRIL 30, 2019). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1a

1a

Supplemental Appendix

SUPPLEMENTAL

APPENDIX

OPINION OF THE U.S. DISTRICT COURT FOR

THE CENTRAL DISTRICT OF CALIFORNIA

(APRIL 30, 2019)

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Case No. CV 05-3459-JFW (Ex)

DAVID CASSIRER, et al.

v.

THYSSEN-BORNEMISZA

COLLECTION FOUNDATION

Filed April 30, 2019,

Decided April 30, 2019

PROCEEDINGS (IN CHAMBERS):

FINDINGS OF FACT AND CONCLUSIONS OF LAW

PRESENT:

HONORABLE JOHN F. WALTER,

UNITED STATES DISTRICT JUDGE.

In this action, Plaintiffs David Cassirer, the Estate

of Ava Cassirer (Egidijus Marcinkevicius, Administrator

WWA), and the Jewish Federation of San Diego County

2a

Supplemental Appendix

(collectively, “Plaintiffs” or the “Cassirers”) seek to

recover the painting, Rue St. Honoré, après midi, effet

de pluie, by French Impressionist Camille Pissarro (the

“Painting”). The Painting was wrongfully taken from

Plaintiffs’ ancestor Lilly Cassirer Neubauer (“Lilly”),1

by the Nazi regime, and is currently in the possession of

Defendant Thyssen-Bornemisza Collection Foundation

(“TBC”), an agency or instrumentality of the Kingdom

of Spain.

After extensive motion practice and three appeals to

the Ninth Circuit, this action came before the Court for

trial on December 4, 2018. In accordance with the Ninth

Circuit’s instructions in its most recent remand to this

Court, see Cassirer v. Thyssen-Bornemisza Collection

Foundation, 862 F.3d 951 (9th Cir. 2017), the trial was

limited to two main questions: (1) Did TBC have actual

knowledge that the Painting was stolen property under

Spanish law?; and (2) Did the Baron Hans Heinrich

Thyssen-Bornemisza (the “Baron”) possess the Painting

in good faith under Swiss law?.

Pursuant to the Court’s Second Amended Scheduling

and Case Management Order [Docket No. 351], the parties

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RIWKHLUOLYHGLUHFWWHVWLPRQ\3ODLQWLIIVÀOHGGHFODUDWLRQV

for the following six witnesses: (1) David Cassirer; (2)

Jonathan Petropoulos; (3) William H. Smith; (4) Alfredo

1. The Court adopts Plaintiffs’ preferred designation and

refers to Lilly Cassirer Neubauer as “Lilly” in its Findings of

Fact and Conclusions of Law.

3a

Supplemental Appendix

Guerrero Righetto; (5) Marc-André Renold; and (6)

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eight witnesses: (1) Evelio Acevedo Carrero; (2) Fernando

J. Pérez de la Sota; (3) Laurie A. Stein; (4) Lynn Nicholas;

(5) Mariano Yzquierdo Tolsada; (6) Adriana de Buerba; (7)

Dr. Wolfgang Ernst; and (8) Guy Jennings. The parties

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Claude Cassirer (deceased). All of Plaintiffs’ and TBC’s

declarations and deposition excerpts were admitted into

evidence. Trial Tr. at 6-7.

TBC elected not to cross-examine any of Plaintiffs’

witnesses. Accordingly, none of Plaintiffs’ witnesses

appeared at trial. Plaintiffs elected to cross-examine only

four of TBC’s witnesses – Mr. Carrero, Mr. de la Sota, Ms.

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on December 4, 2018.

The parties also offered trial exhibits, numbered

from 1-385. 2 Although TBC raised objections to certain of

those exhibits at trial, the objections were subsequently

withdrawn. Accordingly, the Court admitted all of the

exhibits into evidence.

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2019.

2. Some numbers in the sequence were omitted by the parties.

The parties also submitted exhibits related to the 1958 Settlement

Agreement, merely to ensure that there is a complete record for

any appeal. The Amended List of Exhibits and Witnesses [Docket

1R@LGHQWLÀHVHDFKRIWKHH[KLELWVUHFHLYHGLQWRHYLGHQFH

4a

Supplemental Appendix

After carefully considering all of the evidence,

the parties’ trial and post-trial briefs, amicus curiae

briefs, and the arguments of counsel, the Court makes

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accordance with Federal Rule of Civil Procedure 52(a)(1):

FINDINGS OF FACT3

I.

THE CASSIRER FAMILY’S OWNERSHIP OF

THE PAINTING AND SUBSEQUENT LOOTING

OF THE PAINTING BY THE NAZIS

French Impressionist painter Camille Pissarro

completed the Painting in 1897. In 1898, Pissarro sold the

Painting to his primary dealer or agent, Paul DurandRuel of Galerie Durand-Ruel, Paris. On April 11, 1900,

Paul Cassirer purchased the Painting from DurandRuel. Julius Cassirer acquired the Painting sometime

thereafter.

Li l ly Ca s si r er Neubauer, Pl a i nt i f fs’ g r e at grandmother, inherited the Painting in 1926. As a

Jew, Lilly was subjected to increasing persecution in

Germany after the Nazis seized power. In 1939, in order

for Lilly and her husband Otto Neubauer to obtain exit

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3. The Court has elected to issue its decision in narrative

format because a narrative format more fully explains the reasons

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a conclusion of law is hereby adopted as a conclusion of law, and any

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DVDÀQGLQJRIIDFW

5a

Supplemental Appendix

Painting to Jakob Scheidwimmer, a Nazi art appraiser. In

“exchange” for the Painting, Scheidwimmer transferred

900 Reichsmarks (around $360 at 1939 exchange rates),

well below the actual value of the Painting, into a blocked

account that Lilly could not access.

In 1939, Scheidwimmer participated in a second forced

sale involving the Pissarro Painting, trading it for three

German paintings (works by Carl Spitzweg, Heinrich

Buerkel, and Franz Defregger) owned by another German

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Germany. Although Sulzbacher obtained possession of

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the Gestapo.

In 1943, the Painting was sold at the Lange Auction in

Berlin to an unknown purchaser for 95,000 Reichsmarks.

II. LILLY’S POST-WAR RESTITUTION CLAIM

After the war, the Allies established processes for

restoring property to the victims of the Nazis’ looting. The

law in the American Zone of Germany, Military Zone Law

No. 59 (“MGL No. 59”), provided for restitution of property,

or if the property could not be found, compensation. In

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under MGL No. 59 for restitution of, or compensation for,

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59 seeking restitution of, or compensation for, the Painting

and the three German paintings. In 1954, the Court of

High Restitution Appeals (“CORA”) of the Allied High

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owned the Painting (“1954 CORA decision”).

6a

Supplemental Appendix

In 1957, after the German Federal Republic regained

its sovereignty, Germany established a law governing

claims related to Nazi-looted property known as the

Brüg. Lilly then dropped her restitution claim against

Scheidwimmer, and initiated a claim against Germany

for compensation based on the wrongful taking of the

Painting. Grete Kahn, Sulzbacher’s heir, was also a

party to this action. The parties to the action against

Germany, including Lilly, were unaware of the location

of the Painting (and believed that it had been lost or

destroyed during the war). In addition, only two of the

German paintings originally owned by Sulzbacher were

available for return. Accordingly, in 1958, the parties

entered into a settlement agreement (the “1958 Settlement

Agreement”), which provided that: (1) Germany would

pay Lilly 120,000 Deutschmarks (the Painting’s agreed

value as of April 1, 1956); (2) Grete Khan would receive

14,000 Deutschmarks from the payment to Lilly; and (3)

Scheidwimmer would receive two of Sulzbacher’s three

German paintings. Although Lilly settled her claim for

monetary compensation with the German government,

she did not waive her right to seek restitution or return

of the Painting. See Order dated March 13, 2015 [Docket

No. 245]; Cassirer v. Thyssen-Bornemisza Collection

Foundation, 862 F.3d 951, 977-79 (9th Cir. 2017).

III. POST-WAR PROVENANCE

Without Lilly’s knowledge, the Painting surfaced in

the United States in 1951. On July 18, 1951, the Frank

Perls Gallery of Beverly Hills arranged to sell the Painting

to Sidney Brody, an art collector in Los Angeles, for

7a

Supplemental Appendix

$14,850. The Frank Perls Gallery received a commission

of $3,105 for arranging the sale of the Painting to Mr.

Brody. The invoice for the Painting states that it was

purchased for Mr. Brody from “Herr Urban thru Union

Bank & Trust Co.” Trial Exhibit 36. It appears that the

Painting came from Herr Urban’s collection in Munich,

Germany. Trial Exhibit 65.

Prior to arranging the sale of the Painting to Mr.

Brody, Frank Perls and E. Coe Kerr of M. Knoedler

& Co. (“Knoedler”) (an art dealer in New York City)

attempted to determine if the Painting could have been

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the dealers reviewed the 1939 Catalogue Raisonné for

Camille Pissarro, by Lionello Venturi and Ludovic Rodo

Pissarro (which listed minimal provenance information

about the Painting),4 as well as searched a list of stolen

art created after the war.5 Neither of those sources would

have revealed that the Painting had been owned by the

4. A catalogue raisonné is an annotated publication of all of

the known works of an artist, and usually includes provenance,

bibliographic, and exhibition histories for each artwork.

5. In a letter from E. Coe Kerr of Knoedler to Frank Perls

dated February 24, 1951, there is a handwritten note regarding the

Painting which states: “#1018 in Venturi & are you sure there is no

wartime juggle? - it is not listed among the stolen pictures.” Trial

Exhibit 38. (The Painting was image #1018 in the 1939 Venturi

Catalogue Raisonné). Several months later, in a letter from Kerr

to Perls dated May 11, 1951, there is a handwritten note regarding

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DSSDUHQWO\DUHIHUHQFHWREHLQJDEOHWRÀQGWKDWSDLQWLQJLQWKH

Venturi Catalogue Raisonné as well as other books. Trial Exhibit 39.

8a

Supplemental Appendix

Cassirer family or that the Painting had been looted by

the Nazis.

Around February 1952, less than a year after Sidney

Brody purchased the Painting, Frank Perls put the

Painting back on the art market for Brody, placing it on

consignment with Knoedler in New York. On May 7, 1952,

W.F. Davidson of Knoedler wrote to Frank Perls, asking

for additional exhibition and publication information on

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information you have on collections to complete our

pedigree would be very helpful.” Trial Exhibit 42. A

handwritten note on the letter indicates, “info given by

telephone.” Id.

In May 1952, Sydney Schoenberg, an art collector

in St. Louis, Missouri, purchased the Painting from

Knoedler for $16,500. Schoenberg maintained the Painting

in his collection in his hometown of St. Louis. A picture

and detailed description of the Painting was included in

an article written by Perry T. Rathbone, the then director

of the St. Louis Art Museum, about the Schoenberg

Collection in St. Louis. The article appeared in May 1954

in the London and New York editions of the Connoisseur

magazine. The Connoisseur article did not mention Lilly

or the Cassirer family. Trial Exhibit 26.

The Painting remained in the United States for

approximately 25 years from 1951 to 1976.

9a

Supplemental Appendix

IV. THE BARON’S PURCHASE AND POSSESSION

OF THE PAINTING

A.

The Baron’s Purchase of the Painting from the

Stephen Hahn Gallery in New York.

In 1975 or 1976, the Painting was sent to the Stephen

Hahn Gallery in New York City on consignment,

presumably by the Schoenberg estate. The Stephen

Hahn Gallery was a prominent gallery, specializing in

Impressionist and Modern Art, and due to its reputation,

was able to command high prices from collectors. In or

around October and November 1976, the Painting was

publicly exhibited at the Stephen Hahn Gallery. Trial

Exhibit 320.

In October 1976, Baron Hans Heinrich ThyssenBornemisza of Lugano, Switzerland (the “Baron”)

personally visited and saw the Painting at the Stephen

Hahn Gallery in New York. The Baron was a collector of

considerable wealth and standing who had an extensive

knowledge of the art market gained over many years. He

pored over catalogues and art books before purchasing

art works, and employed curators and other experts to

assist him in evaluating the works he was interested in

acquiring. The Baron was undoubtedly aware that there

had been massive looting of art by the Nazis, and it was

“generally known” that the Baron’s family (although not

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Trial Tr. at 81:25-82:6, 116:17-117:2.

10a

Supplemental Appendix

The Baron offered Stephen Hahn $300,000 for the

Painting. On October 27, 1976, Hahn wrote to the Baron

and advised him that his offer of $300,000 was accepted.

$25,000 of that purchase price was a commission that

would be paid to Stephen Hahn. The Baron purchased

three other artworks from the Stephen Hahn Gallery at

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Camille Corot, Paul Cézanne, and Fernando Léger.6

1.

The Baron paid fair market value for the

Painting.

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for the Painting in 1976, and that the commission paid

to Hahn (of just under 10% of the purchase price) was

consistent with market norms.

Fair market value is established by market data

comparison using similar and like works wherever

possible which have been sold within a similar time frame.

Attention is paid to medium, size, subject matter, date of

the work, importance in the artist’s oeuvre, and condition

where it is known. The Painting was completed in 1897,

measures 81 cm x 65 cm, and depicts a Parisian street

scene in the rain. There is public information about three

sales of comparable Pissarro paintings for the time frame

in question (1976):

6. With respect to the Cézanne, which the Baron purchased

for $1.5 million, Baron was later quoted in an interview as saying “I

neither remember where nor from whom I bought it, nor any story

related to it, only that I always wanted to have a Cézanne and I

believe I bought it in Paris.” Trial Exhibit 343 at 34.

11a

Supplemental Appendix

(1) On July 1, 1975, Camille Pissarro’s Soleil,

après-midi, la rue de l’Épicerie, Rouen,

81.9 cm x 65.4 cm (1898) was sold by

Sotheby’s London for £120,000 (or $262,800;

£1=$2.19). This was the highest publicly

reported price paid for a work by Pissarro

in 1975.

(2) On March 17, 1976, Camille Pissarro’s La

Mère Jolly raccommodant, 103 cm x 80.7

cm (1874) was sold at Sotheby Parke Bernet

for $230,000. This was the highest publicly

reported price paid for a work by Pissarro

in 1976. Although this work was completed

earlier than the Painting, it is somewhat

larger than the Painting.

(3) In May 1977, Camille Pissarro’s Boulevard

de Montmartre, après-midi, temps de

pluie, 52.5 cm x 66 cm (1897), a work very

comparable to the Painting, was sold by

Christie’s New York for $275,000. This was

the highest publicly reported price paid for

a Pissarro in 1977. It was completed in the

same year as the Painting and depicts the

same meteorological conditions, namely the

wet, glistening, Parisian streets after a rain.

It is somewhat smaller than the Painting

but depicts the more iconic Boulevard de

Montmartre.

Based on these comparable Pissarro paintings, and

the opinions expressed by TBC’s expert, Guy Jennings,

12a

Supplemental Appendix

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commission was “entirely in line with the prevailing prices

at the upper end of the Pissarro market in the mid 1970s.”

Declaration of Guy Jennings [Docket No. 394] at ¶ 37.

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expert William H. Smith unpersuasive. Mr. Smith opined

that the Baron paid far below fair market value for the

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should have sold the Painting to the Baron for between

$510,000 to $600,000. Although Mr. Smith agreed that at

least two of the above artworks were comparable to the

Painting, he believed that, because the Painting was sold

through a dealer, rather than at an auction, the fair market

price should be much higher: “All dealers mark up the

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from art work sold at auction, the price of which contains

no additional mark up (because there is no dealer) . . . . [A]

small gallery operating in a cheap location might charge

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on cost, while a gallery in an expensive location [like the

Stephen Hahn Gallery] would likely charge 70-100% on

cost.” Declaration of William H. Smith [Docket No. 408]

at ¶¶ 13-14. However, as pointed out by TBC’s expert Guy

Jennings, Mr. Smith failed to take into account that the

Painting was on consignment and that Stephen Hahn did

not own the Painting. Declaration of Guy Jennings [Docket

No. 394] at ¶¶ 31-36. According to Mr. Jennings, when an

artwork is on consignment, “a commission of just under

10% for acting as an agent is entirely consistent with

market norms.” Id. at ¶ 38. Mr. Smith did not testify to the

contrary. Instead, Mr. Smith completely disregarded the

13a

Supplemental Appendix

$25,000 commission as “irrelevant” because it appeared

to be an “advisory commission” paid to a Lichtenstein

entity “Art Council Establishment Vaduz,” rather than

a commission paid to Stephen Hahn. See Declaration of

William H. Smith [Docket No. 408] at ¶ 18 n.1. However,

as more recently discovered evidence demonstrates

and as Plaintiffs’ admit, the $25,000 commission was

in fact a dealer’s commission, rather than an “advisory

commission.” See Trial Exhibit 320; Stipulated Facts

[Docket No. 377] at ¶ 27.

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Baron paid fair market value for the Painting in 1976.

2.

The Baron likely saw the remnants of

numerous labels on the verso of the Painting,

including a partial remnant of a label from

the Cassirer gallery.

The Baron likely inspected both the front and back

(or verso) of the Painting before purchasing it. Trial Tr.

84:14-17. At the time the Baron inspected the Painting,

there were remnants of numerous labels on the verso

of the Painting,7 including a remnant of a label from

a gallery owned by members of the Cassirer family,

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in Berlin, Germany. 8 The remnant of the label from the

7. When a master work of art goes to a gallery or exhibition,

the establishment places a label on the verso (back) of the work,

typically on the stretcher boards or frame.

8. In 1898, Paul and Bruno Cassirer opened an art gallery

and publishing house, “Bruno und Paul Cassirer, Kunst und

14a

Supplemental Appendix

Bruno and Paul Cassirer Gallery bears the partial address

“VICTO” of Victoriastrasse 35, refers to “BERLIN”, and

bears the partial German words “KUNST UND VE” (or

fully Kunst Und Verlagsanstalt, or Art and Publishing

Establishment), unique to the Bruno and Paul Cassirer

Gallery operated between 1898 and 1901.9 Although the

partial label from the Cassirer Gallery referenced Berlin,

the provenance information provided to the Baron did

not indicate that the Painting had ever been located in

Germany. Indeed, the provenance information provided

by the Stephen Hahn Gallery only referenced the gallery

Durand-Ruel in Paris, where the painting was exhibited

in 1898 and 1899.

There were no Nazi labels, markings, writings, or

suspicious customs stamps on the frame, verso, or any

other part of the Painting. However, some of the labels on

the verso of the Painting appear to have been intentionally

torn off or removed. See Trial Exhibits 348, 379.

Despite the minimal provenance information provided

to the Baron by the Stephen Hahn Gallery, the presence

Verlagsanstalt” at Victoriastrasse 35 in Berlin, Germany. In 1901,

Bruno Cassirer left the business to open a separate publishing house,

leaving Paul Cassirer to run the art gallery at Victoriastrasse 35.

The Cassirer Gallery, which operated under varying names over the

years, remained in business until 1935.

9. Walter Feilchenfeldt, son of the original Cassirer gallerist

Feilchenfeldt (also named Walter) did not recognize the partial label.

Declaration of Laurie A. Stein [Docket No. 412] at ¶ 100. However,

a Cassirer gallery scholar, Bernd Echte, recognized it as a partial

label from the Bruno and Paul Cassirer gallery. Id. at ¶ 102.

15a

Supplemental Appendix

of what appear to be intentionally removed labels, and the

presence of a torn label demonstrating that the Painting

had been in Berlin, there is no evidence that the Baron

made any inquiries regarding the Painting’s provenance or

conducted any investigation of the Painting’s provenance

before purchasing it.10

3.

The Baron’s employee mistakenly recorded

that the Painting had been purchased in

Paris.

On November 22, 1976, the Baron received an invoice

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his purchase of the Painting. However, in a notebook

recording the Baron’s purchases, an employee or agent of

the Baron erroneously recorded the name of the Painting

as “La Rue St. Honoré, effet de Soleil, Après-Midi, 1898”

(an entirely different Pissarro painting),11 and as having

been purchased from the “Hahn Gallery, Paris” (rather

10. It does not appear that the Baron customarily conducted

detailed investigations into the prior ownership or whereabouts of

the artworks he acquired. According to a New York Times article,

“[i]n 1972, the Italians custom police accused the Baron and some

associates of having played a role in the illegal export of art works

from Italy,” but the charges were later dropped or suspended. Trial

Exhibit 367. The Baron reportedly said, “I hope none of the pictures

in my gallery was painted in Switzerland. They were all painted

abroad. I buy the stuff in Switzerland and the United States, but

how it gets there I don’t know. I can’t check all that.” Id.

11. “La Rue St. Honoré, effet de Soleil, Apres-Midi, 1898”

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whereas the Painting (Rue St. Honoré, après midi, effet de pluie)

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16a

Supplemental Appendix

than the Stephen Hahn Gallery in New York). Trial

Exhibit 322. There is a different gallery in Paris, “Galerie

Joseph Hahn,” owned by Stephen Hahn’s father, Joseph

Hahn. There is no evidence that the Baron ever owned

Pissarro’s La Rue St. Honoré, effet de Soleil, Après-Midi,

1898” and there is no evidence that the Painting was ever

located at the Galerie Joseph Hahn in Paris.

Later, the provenance for the Painting in publications

that accompanied certain of the Baron’s exhibitions

erroneously stated that the Painting was acquired from

the “Galerie Joseph Hahn, Paris” or “Private Collection,

Paris,” rather than from the Stephen Hahn Gallery in

New York. Trial Exhibits 172, 174, 176. The name of the

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Painting was “Rue Saint-Honore, Afternoon: Effect of the

Rain”. See, e.g., Trial Exhibit 172.

The Court finds that the mistaken or incorrect

provenance recorded in the purchase notebook was

unintentional, and was likely the result of carelessness.

The initial incorrect provenance information likely

resulted from the employee’s confusion between the

Stephen Hahn Gallery and the similarly-named gallery

in Paris, the Galerie Joseph Hahn. That incorrect

provenance information was then likely copied and

repeated in subsequent publications.12

12. Although the Court recognizes that at least one publication

stated that the Painting was acquired from a “Private Collection,

Paris” (instead of from Galerie Joseph Hahn, Paris as recorded in

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PRUHVLJQLÀFDQWWKDQWKHPLVVWDWHPHQWWKDWWKH3DLQWLQJKDGEHHQ

acquired from Galerie Joseph Hahn.

17a

Supplemental Appendix

Moreover, an intentional misrepresentation regarding

the provenance of the Painting is inconsistent with, and

not supported by, other evidence. For example, on March

21, 1989, Irene Martin, the Administrative Director and

Curator of the Baron’s collection, wrote to John Rewald,

a noted Pissarro expert, and invited him to curate an

exhibition at Villa Favorita (scheduled for 1990) and to

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paintings in the collection including the Painting. Trial

Exhibit 210. Ms. Martin anticipated that it would take

three years to complete the catalogue. Id. at 1-3. Mr.

Rewald, a noted Pissarro expert, declined the invitation

in a letter dated April 13,1989, stating that he could not

commit to this task because of pre-existing commitments.

Id. at 4. Had Mr. Rewald accepted Ms. Martin’s offer, he

might have discovered that the Baron had purchased the

painting from the Stephen Hahn Gallery in New York,

rather than in Paris (and, as discussed infra, might

have even discovered that the Painting had been stolen

from Lilly). Accordingly, had the Baron intended to

misrepresent the provenance of the Painting, it is highly

unlikely that he would have asked Rewald to research the

Painting, which might have resulted in the discovery of

his misrepresentation.

Furthermore, the provenance information for the

other three paintings that the Baron purchased from the

Stephen Hahn Gallery in October 1976 also incorrectly

stated that the paintings were purchased from “Galerie

Hahn, Paris” or “Galerie Joseph Hahn, Paris” and not

from the Stephen Hahn Gallery in New York. Stipulated

18a

Supplemental Appendix

Facts [Docket No. 377] at ¶ 30.13 There has been no claim

that any of these three paintings had been looted by

the Nazis, and, thus, no rational reason to obscure their

provenance.

$FFRUGLQJO\WKH&RXUWÀQGVWKDWFDUHOHVVQHVVEHWWHU

explains the error in provenance, rather than intentional

misrepresentation. As TBC’s expert Laurie Stein states,

“[s]ometimes, an error in documentation is a simple error

in documentation.” Declaration of Laurie A. Stein [Docket

No. 412] at ¶ 153.

B. The Baron’s Possession of the Painting

Once acquired by the Baron, the Painting was

maintained as part of the Thyssen-Bornemisza Collection

(the “TB Collection”) at his Villa Favorita estate in

Lugano, Switzerland until 1992, except when it was on

public display in exhibitions outside of Switzerland.

In the July 1988 edition of Architectural Digest, The

International Magazine of Fine Interior Design, a 9-page

article titled “The Collectors: Baron Hans Heinrich

Thyssen-Bornemisza, The Villa Favorita in Lugano,”

13. The parties stipulated that TBC’s provenance report for

the four paintings that the Baron purchased from the Stephen Hahn

Gallery in October 1976 (including the Painting) incorrectly stated

that they were purchased from the Baron from “Galerie Hahn,

Paris” or “Galerie Joseph Hahn Paris” and not from the Stephen

Hahn Gallery in New York. Presumably, the incorrect provenance

information in TBC’s report came from provenance information

provided by the Baron.

19a

Supplemental Appendix

IHDWXUHG WKH 3DLQWLQJ DQG VSHFLÀFDOO\ LGHQWLÀHG LW DV

“Pissarro’s Rue Saint-Honoré, Effet de Pluie: AprèsMidi, 1897.” Trial Exhibit 327. At the time of the article

in Architectural Digest, the Painting hung in the Baron’s

dressing room. Although the galleries at Villa Favorita had

been opened to the public on weekends for seven months of

the year and on weekdays when special exhibitions were

on display, it is unclear whether visitors would have been

allowed to tour the Baron’s dressing room.

The Painting, however, was often publicly exhibited

E\WKH%DURQ6SHFLÀFDOO\LWZDVIHDWXUHGLQDWOHDVWRQH

exhibition at Villa Favorita in 1990 as well as several

exhibitions around the world, including ones in Australia

and New Zealand in 1979 and 1981; in Tokyo, Japan from

May to July 1984; in London at the Royal Academy of Arts

in 1984; in Florence, Italy at the Palazzo Pitti in 1985; in

Dusseldorf and Nuremburg, Germany in 1985; in Paris,

France at the City of Paris Modern Art Museum in 1985

to 1986; and in Spain from February 10 to April 6, 1986.

The Painting was pictured in publications accompanying

these exhibitions. As noted supra, the provenance for

the Painting in certain of these publications, however,

erroneously stated that the Painting was acquired from

the “Galerie Joseph Hahn, Paris” or “Private Collection,

Paris,” rather than from the Stephen Hahn Gallery in

New York. Trial Exhibits 172, 174, 176.

V. THE LOA N OF THE PA IN TING TO THE

KINGDOM OF SPAIN

In 1988, Favorita Trustees Limited (“Favorita”), an

entity created by the Baron, and the Kingdom of Spain

20a

Supplemental Appendix

reached an agreement that the Baron would loan a large

portion of the TB Collection (the “Loan Collection”),

including the Painting, to the Kingdom of Spain, for a

period of up to nine and a half years. Pursuant to that

agreement (the “Loan Agreement”), the Kingdom of Spain

created TBC14 to maintain, conserve, publicly exhibit, and

promote the Loan Collection’s artworks (which consisted

of 787 artworks). The Kingdom of Spain agreed to display

the Loan Collection at the Villahermosa Palace in Madrid,

Spain, which would be restored and redesigned for its

new purpose as the Thyssen-Bornemisza Museum (the

“Museum”).15 In addition, in consideration of the loan, the

Kingdom of Spain agreed to pay Favorita $5 million U.S.

dollars per year (that amount to be annually indexed to

the U.S. Consumer Price Index).

In the Loan Agreement, Favorita expressly warranted

to the Kingdom of Spain that it “owns the [p]aintings

[being loaned] and is entitled to lend the [p]aintings.”

Trial Exhibit 83, Clause 32.3. In addition, as a condition

precedent or “suspensive condition” to making the loan,

)DYRULWD ZDV UHTXLUHG WR SURYLGH D FHUWLÀFDWH WR WKH

14. TBC is an agency or instrumentality of the Kingdom of

Spain, which the Ninth Circuit previously recognized in Cassirer v.

Kingdom of Spain, 616 F.3d 1019, 1027 (9th Cir. 2010). TBC’s initial

ERDUGRIGLUHFWRUVKDGÀYHPHPEHUVDSSRLQWHGE\WKH.LQJGRPRI

6SDLQDQGÀYHPHPEHUVDSSRLQWHGE\WKH%DURQ

15. The Kingdom of Spain spent approximately $27 million to

refurbish the Villahermosa Palace and approximately $16 million for

costs associated with acquiring and furnishing it with the necessary

equipment, hardware, installations, IT, etc. Stipulated Facts [Docket

No. 377] at ¶ 49.

21a

Supplemental Appendix

Kingdom of Spain stating that “it owns directly all [p]aintings

forming part of the Loan Collection.” Id. at Clause 5.1(c).

The loan of the paintings was also conditioned on the

Kingdom of Spain receiving legal opinions by its Bermuda,

U.K., and Swiss advisors, among others, that Favorita

had the authority to enter into and perform the Loan

Agreement (i.e. deliver the paintings to the borrower).

Stipulated Facts [Docket No. 377] at ¶ 57; Trial Exhibit

83, Clause 5.1(c).

Accordingly, in 1989, the Kingdom of Spain, through

its legal counsel, conducted an investigation to verify

that Favorita had clear and marketable title to the Loan

Collection. The Kingdom of Spain’s Swiss counsel was

primarily responsible for the investigation of title because

the majority of the artworks in the Loan Collection were

located in Switzerland.

The Kingdom of Spain and its counsel decided to

assume that Favorita had ownership of the works acquired

prior to 1980, and only investigated works that were

acquired after 1980. Counsel selected 1980 as a “root of

title” based on the following factors:

(1) Counsel considered it “almost inconceivable

that the family would have made fraudulent

arrangements in regard to ownership of

the paintings as far back as 1980 with the

intention of frustrating a deal with the

Kingdom of Spain eight years later.” Trial

Exhibit 84 at 2-3; see also Trial Exhibit 223

at 490.

22a

Supplemental Appendix

(2) Counsel considered that “any fraud or

theft affecting title to the paintings which

had taken place before the paintings were

acquired by the family would be unlikely to

affect more than a single painting, or a small

group of paintings,” see Trial Exhibit 223 at

489-90, because “presumably [the paintings]

will on the whole have been purchased on a

‘piece meal’ basis from different owners.”

Trial Exhibit 84 at 3.

(3) Swiss counsel advised that the paintings

which belonged to the TB collection in

1980 (and the acquisition of which was

regulated by Swiss law) could be assumed

to be owned by Favorita pursuant to the

Swiss laws of acquisitive prescription “if,

despite an earlier irregularity, the Baron

had acquired the paintings in good faith.”

7ULDO([KLELW7KHÀYH\HDUOLPLWDWLRQRQ

any potential claims under Swiss law would

have already expired in 1988, and assuming

that the Baron had acquired the paintings in

good faith, ownership over those paintings

ZRXOGKDYH´GHÀQLWHO\µEHHQDFTXLUHG7ULDO

Exhibit 85; see also Trial Exhibit 223 at 490.

(4) The Kingdom of Spain was “not actually

buying the [paintings] themselves” and

ZRXOGKDYH´DQLQGHPQLW\DQGFHUWLÀFDWHRI

ownership in any event.” Trial Exhibit 84

at 2.

23a

Supplemental Appendix

(5) The “documentary” title investigation (not

including the physical inspection of the

paintings) had to be completed within a

short time frame (60 days) in order for the

legal opinions to be issued as required by

the Loan Agreement. See Declaration of

Fernando J. Pérez de la Sota [Docket No.

405] at ¶ 50; Trial Exhibit 83, Clause 5.1.

Based on these factors, the Kingdom of Spain and its

counsel decided not to conduct any investigation as to the

artworks acquired before 1980. Because the Baron had

acquired the Painting prior to 1980, the Kingdom of Spain

and its counsel conducted no investigation of the Painting’s

provenance or title. The Kingdom of Spain and its counsel

were aware, however, that if the Baron had acquired any

of artworks (including the Painting) in “bad faith,” or,

in other words, if he “knew or should have known of the

lacking right of the transferor,” ownership could not have

been acquired by him. Trial Exhibit 85 at 3. In such a

case, “[t]he rightful owner keeps his rights at all times to

claim recovery of the object.” Id. The Kingdom of Spain

assumed that the Baron acted in good faith, because “we

simply had no reason to believe otherwise.” Declaration

of Fernando J. Pérez de la Sota [Docket No. 405] at ¶ 56.

Although no investigation was conducted with respect

to artworks acquired prior to 1980, the Kingdom of Spain

and its counsel did investigate artworks acquired after that

date. Counsel inspected documents relating to transfers

within the Baron’s family structure since 1980 as well as

records in Lugano for paintings acquired after January

24a

Supplemental Appendix

1, 1980, including invoices, purchase agreements, internal

PHPRVSD\PHQWRUGHUVEDQNWUDQVIHUVDQGFRQÀUPDWLRQ

letters. Documentation regarding acquisitions made after

ZHUHPRUHFORVHO\VFUXWLQL]HGEHFDXVHWKHÀYH\HDU

limitation period on any potential claims under Swiss

law had not yet expired. According to Mr. de la Sota,

164 paintings (50 old masters and 114 modern masters),

URXJKO\RQHÀIWKRIWKH/RDQ&ROOHFWLRQZHUHLQYHVWLJDWHG

Declaration of Fernando J. Pérez de la Sota [Docket No.

405] at ¶ 96; Trial Exhibit 98; Trial Tr. at 25:20-27:8.

None of these investigations revealed any evidence that

the Baron had acted in bad faith.

On February 28, 1989, following their “documentary”

investigation, Swiss counsel provided an opinion to the

Kingdom of Spain that stated: “As at the date of hereof

all the Paintings of the Loan Collection are owned by

FAVORITA TRUSTEES LIMITED.” Trial Exhibit

51 at 6. This opinion was specifically limited by the

´TXDOLÀFDWLRQWKDWLWLVEDVHGRQWKHDVVXPSWLRQWKDWQR

third party outside of the group of entities controlled by

[the Baron] has any claim under any applicable law to

recover an object on the basis of prior theft, embezzlement,

abuse of trust and similar reasons or on the acquisition

or possession in bad faith by [the Baron] or the entities

he controls.” Id. at 7.

On June 22, 1992, the Museum received the Painting.

TBC’s art experts inspected and analyzed the condition of

the Painting on June 26, 1992, which included an inspection

of the front and back of the Painting. Tr. Transcript 33:1334:17; Trial Exhibit 217. The purpose of the inspection was

25a

Supplemental Appendix

to determine if the Painting had been damaged during

its transfer from Switzerland to Spain. Declaration of

Fernando J. Pérez de la Sota [Docket No. 405] at ¶¶ 67-69;

Trial Tr. 33:13-35:12.

On October 10, 1992, the Museum opened to the public

with the Painting on display.

VI. TBC’S PURCHASE AND POSSESSION OF THE

PAINTING

The Kingdom of Spain later sought to purchase the

Loan Collection (hereinafter, the “Collection”). On June

18, 1993, the Spanish cabinet passed Real Decreto-Ley

11/1993, authorizing the government to enter into a

contract allowing TBC to purchase the 775 artworks

that comprised the Collection. In accordance with Real

Decreto-Ley 11/1993, on June 21, 1993, the Kingdom of

Spain, TBC, and Favorita entered into an Acquisition

Agreement, by which Favorita sold the Collection,

including the Painting, to TBC.

A.

TBC’s Purchase Price and the Value of the

Collection

Pursuant to the Acquisition Agreement, TBC

purchased the Collection for $338,216,958.09. The total

purchase price was $350,000,000, but the amount paid

in connection with the loan (approximately $12,000,000)

was subtracted from that price. TBC’s purchase of the

Collection was entirely funded by the Kingdom of Spain.

26a

Supplemental Appendix

In addition to the purchase price, TBC also incurred

several onerous obligations, including, for example, that it

would: (1) use the Palace Villahermosa as the “ThyssenBornemisza Museum” in perpetuity; (2) not sell, exchange,

charge, pledge, or otherwise alienate, encumber, or

dispose of any artwork in the Collection in any manner

whatsoever; (3) with limited exceptions, exhibit the whole

of the Collection to the public at the Museum; (4) with

limited exceptions, not exhibit any work of art which does

not form part of the Collection with the Collection at the

Museum; (5) keep the Museum up to standards consistent

with best practices of European museums of international

standing, and ensure that the promotion and publicity of

the Collection would always be consistent with the highest

standards of artistic merit; (6) arrange for up to ten

exhibitions of paintings from the Collection at the Villa

)DYRULWDLQ/XJDQR6ZLW]HUODQGDQG  PDLQWDLQVSHFLÀF

and exacting standards for the environmental conditions

of the Museum, including restrictions on light, humidity,

WHPSHUDWXUHDLUYHQWLODWLRQDQGÀOWUDWLRQYLEUDWLRQOHYHOV

and security. Trial Exhibit 96. In addition, as part of the

Acquisition Agreement, TBC agreed to amend its by-laws

such that: (1) the Thyssen family would be entitled to

appoint one third of the positions on the board of trustees

of TBC in perpetuity; and (2) those Thyssen trustees

would have veto power over a number of matters including

the standards of the Museum and the amendment of the

by-laws where their rights were affected.

Prior to entering into the Acquisition Agreement, both

Favorita and TBC requested opinions as to the value of the

Collection. At the request of Favorita, Sotheby’s prepared

27a

Supplemental Appendix

a mid-estimate auction value of the Collection as of

January 1, 1993, taking into account TBC’s obligations to

purchase, maintain, and house the Collection together as a

unit. To arrive at the appraised value, Sotheby’s began by

considering the total “insurance value” for each painting

in the Collection as of 1990. The 1990 insurance value of

the Collection was $1,692,659,500. Trial Exhibits 214, 342.

Sotheby’s then applied several correcting factors. First,

Sotheby’s converted insurance values for each artwork

into mid-auction values as follows: Old Masters and

British Pictures pre-1980, Continental paintings, Prints,

and Modern British paintings were discounted by 40%

of the insurance value; Impressionist and Contemporary

paintings were discounted by 30% of the insurance

value; and Early American and Contemporary-American

paintings were discounted by 25% of the insurance value.

Trial Exhibit 214. The 1990 mid-auction values were

WKHQ DGMXVWHG WR UHÁHFW WKH JHQHUDO GRZQWRZQ LQ WKH

art market between 1990 and 1993 (the date of the new

appraisal) as follows: Contemporary paintings were given

a 35% discount; Prints and Contemporary-American

paintings were given a 30% discount; and Impressionist

and Continental paintings were given a 25% discount,

including the Painting. Trial Exhibit 214. The 1993 midDXFWLRQYDOXHZDVWKHQDGMXVWHGWRUHÁHFWWKHUHVWULFWLRQV

placed on the purchase of the Collection, including that

the Collection had to be purchased, maintained, and

housed together as a unit. Sotheby’s determined that

these restrictive conditions would reduce the total value

by some 30 to 50%. Trial Exhibits 214, 229. As a result of

these correcting factors, Sotheby’s appraised the value

of the Collection between $495 million and $693 million.

28a

Supplemental Appendix

Trial Exhibits 229, 241. Sotheby’s emphasized that “whilst

this opinion has been reached after careful consideration,

we are not aware of any directly comparable property

disposals on which to base this opinion.” Trial Exhibit

229 at 2.

7KH6RWKHE\·VYDOXDWLRQZDVLQGHSHQGHQWO\YHULÀHG

in whole and part, by three internationally recognized

experts selected and appointed by the Kingdom of Spain.

One expert, William B. Jordan, valued the Old Masters.

He opined, in relevant part:

The question of the collection’s value becomes

something else when taking into account the

FRQGLWLRQVRIWKLVSDUWLFXODUVDOH³WKDWLWPXVW

be executed en bloc and that no paintings

may ever be sold by the buyer. . . . Sotheby’s

estimate of a 30%-50% discount in the value of

the collection to account for the purchase en bloc

and the conveyance of restricted title seems to

PHHQWLUHO\MXVWLÀHG

Trial Exhibit 230 at 3. Another expert, Theodore E.

Stebbins, provided an opinion on the American paintings

in the Collection, both Early and Contemporary. He opined

that the 30% reduction for Contemporary American

Paintings is reasonable and that the Sotheby’s reduction

for Early American paintings should be reduced further.

He also opined that: “[t]he[ ] very onerous conditions [in

WKH$FTXLVLWLRQ$JUHHPHQW@ZRXOGVLJQLÀFDQWO\UHGXFHWKH

monetary value of the Collection. In my opinion, a further

GHGXFWLRQIRUWKHVHFRQGLWLRQVRIÀIW\SHUFHQW  ZRXOG

29a

Supplemental Appendix

be entirely reasonable.” Trial Exhibit 234 at 1. Another

expert, François Daulte, was asked to consider the

impressionist, post-impressionist, and modern paintings

in the collection (excepting those paintings by American

artists). Daulte stated in a letter to the Spanish Minister

of Culture that the proposed sale price of $350,000,000

VHHPV´UHDOLVWLFDQGMXVWLÀHGµ+HEDVHGWKLVRSLQLRQRQ

the same factors considered by Sotheby’s as well as TBC’s

additional obligation to refurbish and use the Palace

Villahermosa as a museum for the collection, and the fact

that the Baron and his family would be members on TBC’s

ERDUGZLWKVLJQLÀFDQWULJKWV7ULDO([KLELW

The Kingdom of Spain also asked Juan G. Dominguez

Macias, a prominent Spanish registered auditor, to

calculate the value of the main additional obligations which

Spain and TBC had agreed to undertake (other than the

purchase price), such as, for example, the refurbishment

of the Palace Villahermosa and its use for the Museum on

a permanent basis. Macias established the value of these

additional obligations at roughly 27 billion Spanish pesetas

(over $200 million). Trial Exhibit 238.

Based on the foregoing opinions on valuation, the

parties represented and warranted in the Acquisition

Agreement that they each, having been separately advised,

“independently formed the view that the consideration for

the purchase of the [Collection] provided by [TBC] is a

fair arm’s length consideration having regard to that

advice and the substantial obligations undertaken by

[TBC] under and pursuant to this Agreement and the

documents entered into this Agreement and comprised

30a

Supplemental Appendix

in the consideration provided by it and all other relevant

factors.” Trial Exhibit 96 at 26 (Clause 11.6.6); see also

id. at 5.

Based on the evidence, the Court finds that the

SXUFKDVHSULFHSDLGE\7%&IRUWKH&ROOHFWLRQ³LQOLJKW

of the other commitments and restrictions agreed to

E\ 7%&³ZDV IDLU DQG UHDVRQDEOH 7KH &RXUW UHMHFWV

Plaintiffs’ claimed valuation of $1 to 2 billion, because it

fails to take into account the additional commitments and

restrictions undertaken by TBC.16

16. Plaintiffs did not retain an expert to independently value

the Collection (as of 1993), but instead merely rely on: (1) a printout

from TBC’s website which states that the Collection had an estimated

value of “between one and one and a half billion dollars;” and (2) an

article from the Los Angeles Times, which states that the Collection

was valued at $2 billion. Trial Exhibits 53, 132 at 6. However, neither

of these sources takes into account TBC’s additional obligations. In

fact, TBC’s website expressly acknowledges that the valuation of one

to one and a half billion does not take into account TBC’s additional

obligations: “At that time, the collection was said to have an estimated

YDOXH RI EHWZHHQ RQH DQG RQH DQG D KDOI ELOOLRQ GROODUV D ÀJXUH

calculated taking into account the prices paid for acquisitions and

DSSO\LQJFRPSOH[LQGLFHVFRPSDULQJWKHPZLWKLQVXUDQFHÀJXUHV

looking at transactions on the open market for similar works of art,

etc. However, the Spanish state was no ordinary purchaser, but would

acquire a series of obligations concerning the future of the collection,

including the most important obligation: an agreement not to sell

any of the works purchased.” Trial Exhibit 132 at 6.

31a

Supplemental Appendix

B. Favorita’s Representations and Warranties

Regarding Ownership and the “Pledge” or

“Prenda”

As part of the Acquisition Agreement, Favorita

represented and warranted to TBC that it was “the legal

owner” of the artworks in the Collection and that TBC

ZRXOG EHFRPH ´WKH DEVROXWH EHQHÀFLDO RZQHUµ RI WKRVH

artworks, including the Painting. Trial Exhibit 96, Clause

11.1.1; Stipulated Facts [Docket No. 377] at ¶ 69. Favorita

also represented and warranted that “[i]t is not engaged

in any litigation or arbitration proceedings which could

in any way directly or indirectly affect title to or right to

quiet enjoyment” of TBC “to any of the Paintings or any

RIWKHSURYHQDQFHÀOHVRUWKHULJKWRUWLWOHRI>)DYRULWD@

to the consideration hereunder and it does not know of

any such proceedings pending or threatened or anything

which is likely to lead to such proceedings.” Trial Exhibit

96, Clause 11.6.4. In addition, Favorita represented and

warranted that “[n]one of the Paintings has, to [Favorita’s]

actual knowledge (without its having made any enquiry)

been illegally exported from Spain in the past.” Trial

Exhibit 96, Clause 11.1.3. Favorita, however, refused to

make any representation or warranty as to “the absence

(or otherwise) of knowledge of illegal exports from any

jurisdiction other than Spain.” Trial Exhibit 223 at 487.

In addition, as part of the Acquisition Agreement,

Favorita executed a “deed of pledge” or “prenda” for

paintings not included in the Collection with a total value

of $10 million as security for Favorita’s performance

under the terms of the Acquisition Agreement. TBC and

32a

Supplemental Appendix

the Kingdom of Spain requested this pledge, in part, in

order to protect themselves against the risk that there

might be a painting or small group of paintings that could

KDYHDWLWOHLVVXH7KHWHUPRIWKHSOHGJH³WKUHH\HDUV³

intentionally corresponded to Spain’s three-year good

faith acquisitive prescription period as provided in Article

1955 of Spain’s Civil Code. Declaration of Fernando J.

Pérez de la Sota [Docket No. 405] at ¶ 101.

C.

TBC’s 1993 Title Investigation

The Acquisition Agreement included a condition

precedent or “suspensive condition” that the Kingdom

RI 6SDLQ DQG 7%& UHFHLYH DQG EH UHDVRQDEO\ VDWLVÀHG

with, legal opinions from its Swiss counsel and its UK

counsel, among others. Trial Exhibit 96, Clause 4.1.6.

It also included a condition precedent or “suspensive

FRQGLWLRQµWKDWWKH.LQJGRPRI6SDLQDQG7%&EHVDWLVÀHG

WKDW´LQVSHFWLRQRIWKHUHOHYDQWSURYHQDQFHÀOHVDQGWLWOH

documents and other investigations have not given rise

to serious doubt about [Favorita’s] ability . . . to complete

the sale of any of the Paintings . . . .” Trial Exhibit 96,

Clause 4.1.2.

Accordingly, as contemplated by the Acquisition

Agreement, the Kingdom of Spain and TBC conducted

a further investigation of title in connection with the

purchase of the Collection. The 1989 title investigation

was used as a starting point. The Kingdom of Spain’s and

TBC’s counsel again generally assumed that the Baron

had acted in good faith and that Favorita owned the

works acquired prior to 1980 based on the Swiss laws of

33a

Supplemental Appendix

acquisitive prescription. Declaration of Fernando J. Pérez

de la Sota [Docket No. 405] at ¶¶ 96-106; Trial Exhibits

54, 98. Counsel believed that their assumption regarding

ownership was reasonable, given that four additional years

had elapsed since the 1989 investigation and there had

been no claims challenging title to the artworks during

that time. Declaration of Fernando J. Pérez de la Sota

[Docket No. 405] at ¶ 97; Trial Tr. 46:20-47:15.

Counsel decided that the 1993 title investigation

should cover four main categories of artworks: (1)

paintings which had been transferred between members

of the Thyssen family or group after 1980 but which had

not been covered by the 1989 title investigation (affecting

approximately 50 paintings); (2) paintings which had

been added to the Collection between 1989 and 1993; (3)

paintings which would be subject to the pledge by Favorita

(even if those paintings were acquired before 1980); and

(4) the 30 most iconic paintings of the Collection (even if

those paintings were acquired before 1980) (the “Iconic

Paintings”).17 Declaration of Fernando J. Pérez de la Sota

[Docket No. 405] at ¶ 103; Trial Tr. 28:18-25, 29:25-30:7;

31:3-9. The investigation of the Iconic Paintings and the

paintings subject to the pledge included an examination

RI SURYHQDQFH ÀOHV DQG WLWOH GRFXPHQWV 7ULDO ([KLELWV

54, 254 In addition, for all paintings acquired after 1988

for which counsel could not rely on the Swiss laws of

acquisitive prescription, counsel searched the Art Loss

Register to determine whether any of the paintings had

17. 27 of the 30 Iconic Paintings were acquired before 1980.

Trial Tr. 30:9-10, 31:10-12.

34a

Supplemental Appendix

been registered as stolen. Declaration of Fernando J.

Pérez de la Sota [Docket No. 405] at ¶ 103. All of the

VHDUFKHV ZHUH ´FOHDUµ³QRQH RI WKH SDLQWLQJV DFTXLUHG

after 1988 had been registered as stolen. Id.

The Painting was not included in any of the categories

of artworks investigated by counsel in 1993. Although

counsel’s 1993 title investigation revealed some minor

issues,18 no evidence of the Baron acting in bad faith came

to light.

On August 2, 1993, following the 1993 title investigation,

Swiss counsel provided an opinion to TBC and the

Kingdom of Spain, which stated that:

1. As of the date hereof, all the paintings of

the Permanent Collection (Schedule 1 and

2 of the Agreement) as well as all paintings

listed in Appendix 3 of this legal opinion and

which are to be subject to the notarial deed

of Prenda are owned by [Favorita].

2. [Favorita] has title to transfer the ownership

of the Permanent Collection to [TBC] and

to put in pledge the paintings which are to

be subject to the notarial deed of Prenda.

Trial Exhibit 54 at 7. The Painting was included on

Schedule 2.

18. For example, there was no proof of acquisition for two of

the Iconic Paintings but TBC did not consider this lack of proof

problematic because both had been acquired by the Baron’s father

and had appeared in the 1937 catalogue of the TB Collection.

Declaration of Fernando J. Pérez de la Sota [Docket No. 405] at ¶ 105.

35a

Supplemental Appendix

Swiss counsel’s opinions, however, were expressly

based on an assumption that the Baron had acquired the

artworks in good faith. Indeed, the opinion stated: “All

acquisitions are assumed to have occurred in good faith,

bad faith never having been indicated to, nor discovered

by us.” Id. at 11 (emphasis added). Swiss counsel’s opinions

were also subject to the following “reservation:” “No

opinion is expressed as to title to any painting of the

Permanent Collection and to any painting selected to be

subject to the Prenda which on the basis of bad faith or by

reasons not disclosed to us is subject to any encumbrance

or right of third parties to which the painting may be

subject in the hands of [Favorita].” Id. at 13.

D.

TBC’s Possession of the Painting

The Painting has been on public display at TBC’s

Museum in Madrid, Spain since the Museum’s opening on

October 10, 1992, except when on public display during a

1996 exhibition outside of Spain; while on loan at the Caixa

Forum in Barcelona, Spain from October 2013 to January

2014; and once again while on loan at the Caixa Forum in

Barcelona from October 2016 to February 2017.

Since TBC purchased the Painting in 1993, the

Painting’s location and TBC’s “ownership” have been

LGHQWLÀHGLQVHYHUDOSXEOLFDWLRQVLQFOXGLQJ  :LYHO0LNDHO

Ordrupgaard. Selected Works. Copenhague, Ordrupgaard,

1993, p. 44; (2) Rosenblum, Robert: “Impressionism. The

City and Modern Life”. En Impressionists in Town. [Cat.

Exp.]. Copenhague, Ordrupgaard, 1996, n. 17, pp. 16-17,

il. 61.; (3) Llorens, Tomas; Borobia, Mar y Alarcó, Paloma:

36a

Supplemental Appendix

Obras Maestras. Museo Thyssen-Bornemisza. Madrid,

Fundación Collectión Thyssen-Bornemisza, 2000, p. 156,

il. p. 157; and (4) Perez-Jofre, T.: Grandes obras de arte.

Museo Thyssen-Bornemisza. Colonia, Tascnen, 2001,

p. 540, il. p. 541. Declaration of Evelio Acevedo Carrero

[Docket No. 411] at ¶ 32.

Even though TBC possessed the invoice showing that

the Baron had purchased the Painting from the Stephen

Hahn Gallery in New York, TBC published the same

incorrect provenance information as the Baron, i.e., that

the Painting had been purchased from the Galerie Joseph

Hahn in Paris. Trial Exhibits 57, 109. TBC did not correct

the provenance information for the Painting until after

WKLVDFWLRQZDVÀOHG

TBC’s provenance report for the other three paintings

that the Baron purchased from Stephen Hahn in October

1976, all of which were acquired by TBC, also incorrectly

states that the paintings were purchased from “Galerie

Hahn, Paris” or “Galerie Joseph Hahn, Paris” and not

from the Stephen Hahn Gallery in New York. Stipulated

Facts [Docket No. 377] at ¶ 30. There has never been a

claim that any of these three paintings had been looted

by the Nazis.

To date, TBC has receive no claims against any

artworks in the Collection, other than the Painting.

37a

Supplemental Appendix

VII. AVAILABLE INFORMATION REGARDING

THE PROVENANCE OF THE PAINTING IN

1976 AND 1993

As indicated supra, neither the Baron nor TBC

conducted any investigation into the provenance of the

Painting in 1976 or 1993. However, even if they had,

WKH&RXUWÀQGVWKDWLWZRXOGKDYHEHHQH[WUDRUGLQDULO\

GLIÀFXOWIRUWKH%DURQRU7%&WRKDYHGHWHUPLQHGWKDW

the Painting was stolen or looted property.

$VDQLQLWLDOPDWWHUWKH&RXUWÀQGVWKDWWKHSDUWLDO

label for the Cassirer gallery on the verso of the Painting

would not have led the Baron or TBC to discover that the

Painting had been stolen from the Cassirer family. At most,

the Baron and TBC would have been able to trace the label

to the Bruno and Paul Cassirer Gallery operated between

1898 and 1901 in Berlin. However, that partial label, even

if traced to the Bruno and Paul Cassirer Gallery, would

not necessarily have demonstrated that the Cassirer

family had even owned the Painting, let alone that it had

been looted by the Nazis more than thirty years later.

Indeed, the Cassirer gallery exhibited a large number of

works in the period around 1900, and many of those works

would have had a label from the Cassirer gallery. More

importantly, had TBC or the Baron contacted the son of

the original Cassirer gallerist, Walter Feilchenfeldt, they

would have learned that there were no Cassirer records

from that early period, and that there were no existing

records indicating that the Cassirer gallery had ever

acquired or owned the Painting. Declaration of Laurie A.

Stein [Docket No. 412] at ¶¶ 100-101.

38a

Supplemental Appendix

Moreover, in 1976 and 1993, there was limited

published, or accessible, information about the Painting’s

prior ownership. Indeed, despite the fact that the Cassirer

family had owned the Painting for thirty-nine years before

the Painting was looted by the Nazis, the 1939 Catalogue

Raisonné for Camille Pissarro, by Lionello Venturi

and Ludovic Rodo Pissarro, only mentioned the early

exhibitions of the Painting at the gallery Durand-Ruel

in 1898 and 1899. Trial Exhibit 32. It did not include any

reference to Lilly Cassirer Neubauer, the Cassirer Gallery

in Berlin, or any other member of the Cassirer family in

the provenance or exhibition history of the Painting.

In the immediate post war years, hundreds of lists

and inventories of losses, recoveries, claims, and missing

works were created by the Allied Collection Points (where

looted art was gathered), the recuperation agencies of each

country, and investigatory agencies. The Painting was not

on the French lists published during 1947-49, known as Le

Répertoire des biens spoliés en France durant la guerre

1939-1945, nor was it on the lists created by the Munich,

Wiesbaden, and associated Collection Points. The Painting

was also not included in any “Stolen Art Alerts,” the Art

Loss Register, or on any other databases of lost or looted

art as of 1976 or 1993.

The Painting was included in two 1950 publications

about Camille Pissarro (by Gotthard Jedlicka and Thadée

Natanson), but no provenance or ownership history was

provided. Although a picture and detailed description

of the Painting was included in the May 1954 article in

Connoisseur magazine about the Schoenberg Collection in

St. Louis, it did not mention the Cassirer family or Lilly.

39a

Supplemental Appendix

0RUHRYHUDOWKRXJKWKH&25$GHFLVLRQFRQÀUPHG

that Lilly owned the Painting, the published law reporter

containing the decision was not widely available (except in

specialized law libraries) and was not a typical resource for

provenance researchers. More importantly, the reporter

was indexed by party name (e.g., Lilly Neubauer), not by

the name of the artwork or property at issue, making a

search for the Painting in the 12 volume reporter a virtual

impossibility in 1976 and 1993. Unless the investigator

knew the name of the parties involved in the case, there

was no practical method to search for the Painting in

this set of reporters. Moreover, even if one recognized

the Cassirer label on the back of the Painting, the 1954

CORA decision refers to Lilly as “Lilly Neubauer” or

“Neubauer;” it makes no reference to the name Cassirer.

The CORA decision in the Neubauer case was

described by Walter Schwarz in his book, Rückerstattung

nach den Gesetzen der Alliierten Mächte (Restitution

under the laws of the Allied Powers), published by C.H.

Beck in 1974. Trial Exhibit 314. However, the book’s

description of the Neubauer case refers only to an untitled

Pissarro, and the litigants are not referred to by name but

only as “A” and “B.” The CORA source for the decision is

merely cited in a footnote. No mention is made of Lilly or

the Cassirer family.

A photo card among the Frick Art Library Photo

A rchive 19 resources in New York City references

19. The Frick Art Library Photo Archive is one of the principal

sources for provenance research.

40a

Supplemental Appendix

Schoenberg’s ownership of the Painting and refers to the

Connoisseur article. Again, there is no mention of Lilly

or the Cassirer family.

In 1974, John Rewald of the Museum of Modern Art

in New York published a study called Camille Pissarro.

The Painting is shown in this book as Figure 41. There is

no reference in this book to Lilly, or the Cassirer family’s

ownership of the Painting. However, had the Baron or

TBC contacted Rewald, a noted expert on Pissarro, it is

possible that they would have learned that the Painting

had been stolen from Lilly. Rewald was responsible for

updating the 1939 Catalogue Raisonné, which he took

over from Pissarro’s son, Ludovic Rodo Pissarro (“Rodo

Pissarro”), who had passed away in 1952. After Rodo

Pissarro’s death, Rewald inherited his Pissarro archives,

including a “Photo Card” for the Painting, which noted

in handwritten French that the Painting “was stolen

from Madame Lilly Neubauer (Jewish, during the war

in Germany), currently 18 Norham Rd, Oxford.” Trial

Exhibit 143 at 2. The source of the information is not

recorded on the card. It is not known if John Rewald ever

reviewed Rodo Pissarro’s Photo Cards or if he was aware

of the notations on the Photo Card. However, had the

Baron or TBC asked Rewald for provenance information

with respect to the Painting, it is possible that Rewald

would have reviewed the Photo Card and advised that the

Painting had been stolen from Lilly.

John Rewald died in 1994, and the project to update

the 1939 Catalogue Raisonné was not completed until

the publication of the updated Catalogue Raisonné by

41a

Supplemental Appendix

Claire Durand-Ruel Snollaerts and Joachim Pissarro,

who jointly worked on the project with the Wildenstein

Institute in Paris, in 2005. The updated 2005 Catalogue

Raisonné references the Cassirer family and Lilly in the

provenance information for the Painting, as well as the

Nazis’ looting of the Painting. Snollaerts had discovered

the Photo Card referencing the theft of the Painting

from Lilly Neubauer in the late 1990s in Rodo Pissarro’s

archives (which had been acquired by the Wildenstein

Institute after Rewald’s death). Other than the reference

on the Photo Card, there were no other references to Lilly

Neubauer (or the Cassirers) in the Pissarro archives or

materials located at the Wildenstein Institute. According

to Snollaerts, she did not become aware of any connection

between Neubauer and the Cassirer family until late 2000,

when she was contacted at the Wildenstein Institute by

Connie Lowenthal and Evie Joselow of the Commission

for Art Recovery, with inquiries about the provenance of

the Painting.

6LJQLÀFDQWO\H[FHSWIRUWKH&25$GHFLVLRQWKHUH

was no published information about Lilly’s ownership of

the Painting prior to the 2005 publication of the updated

Catalogue Raisonné.

VIII. CLAUDE CASSIRER’S DISCOVERY OF THE

WHEREABOUTS OF THE PAINTING AND

THE ENSUING LITIGATION

Neither Lilly nor any of her heirs attempted to locate

the Painting between 1958 and late 1999, because they

believed that the Painting had been lost or destroyed

42a

Supplemental Appendix

during the war. Claude Cassirer, Lilly’s heir, discovered

that the Painting was on display at the Museum sometime

in 2000.

2Q0D\&ODXGH&DVVLUHUÀOHGD3HWLWLRQZLWK

the Kingdom of Spain and TBC, seeking return of the

Painting. On May 10, 2005, after his Petition to return the

3DLQWLQJZDVUHMHFWHG&ODXGH&DVVLUHUÀOHGWKLVDFWLRQ

against the Kingdom of Spain and TBC, seeking the

return of the Painting, or an award of damages in the event

the Court is unable to order the return of the Painting. 20

CONCLUSIONS OF LAW

AND ULTIMATE FINDINGS

It is undisputed that the Nazis stole the Painting

from Lilly. Under California law and common law,

thieves cannot pass good title to anyone, including a good

faith purchaser. See Cassirer v. Thyssen-Bornemisza

Collection Foundation, 862 F.3d 951, 960 (9th Cir. 2017).

However, as this Court held, and the Ninth Circuit agreed,

California law and common law do not apply in this case.

Id. at 960-64. Instead, the Court must apply Spanish law.

Id. And, under Spanish law, TBC is the lawful owner of

the Painting.

20. Claude Cassirer died on September 25, 2010, and David

Cassirer, Ava Cassirer, and United Jewish Federation of San Diego

County were substituted as plaintiffs in this action. Ava Cassirer

died on March 2, 2018, and the Estate of Ava Cassirer, Egidijus

Marcinkevicius, Administrator WWA, was substituted as a plaintiff

in this action. Pursuant to the stipulation of the parties, the Kingdom

of Spain was dismissed without prejudice in August 2011.

43a

Supplemental Appendix

I.

THE BARON DID NOT POSSESS THE PAINTING

IN GOOD FAITH UNDER SWISS LAW AND THUS

DID NOT PASS GOOD TITLE TO TBC.

TBC argues that it acquired ownership of the

Painting based on a conveyance from the Baron (via the

1993 Acquisition Agreement). The effect of the Baron’s

conveyance to TBC is governed by Spanish law, and,

under Spanish law, a consensual transfer of ownership

requires title and transfer of possession. Cassirer, 862

F.3d at 974. At the time of the 1993 Acquisition Agreement,

possession of the Painting had already been transferred

to TBC pursuant to the Loan Agreement. Accordingly,

as the Ninth Circuit held, “if the Baron had good title to

the Painting when he sold it to TBC, then TBC became

the lawful owner of the Painting through the acquisition

agreement.” Cassirer, 862 F.3d at 974. Because Spain

applies the law of the situs for movable property, Spanish

law would look to Swiss law to determine whether the

Baron acquired title to the Painting while he possessed

it in Switzerland between 1976 and 1992. Id.

TBC argues that the Baron acquired title to the

Painting through the Swiss law of acquisitive prescription.

“Under Swiss law, to acquire title to movable property

through acquisitive prescription, a person must possess

WKHFKDWWHOLQJRRGIDLWKIRUDÀYH\HDUSHULRGµCassirer,

862 F.3d at 975; see also Swiss Civil Code (ZGB) Art. 728.

As the Ninth Circuit held, “[t]he Baron completed the

ÀYH\HDU SHULRG RI SRVVHVVLRQ EHWZHHQ  DQG µ

Cassirer, 862 F.3d at 975.

44a

Supplemental Appendix

However, in order for the Baron to have acquired title

to the Painting through acquisitive prescription, he must

have also possessed the Painting in good faith during

the relevant time period. Under Swiss law, “good faith”

is presumed. Swiss Civil Code (ZGB) Art. 3(1). But good

faith can be rebutted by showing that a person “failed to

exercise the diligence required by the circumstances.”

See Swiss Civil Code (ZGB) Art. 3(2). Plaintiffs have the

burden of demonstrating that the Baron failed to exercise

the diligence required by the circumstances. Declaration

of Dr. Wolfgang Ernst [Docket No. 396] at ¶ 38; Swiss

Federal Court Judgment of 18 April 2013, BGE 139 III

305, E 3.2.2.

“The degree of attention, which can be demanded

from the buyer, is determined by the circumstances.

What this means in a particular case is largely a matter

of discretion.” Swiss Federal Court Judgment of 18 April

2013, BGE 139 III 305, E 3.2.2 (English translation). In

general, under Swiss law, a purchaser does not have a

duty to conduct inquiries as to the seller’s title; he only has

such a duty if there are actual and concrete reasons for

suspicion. See, e.g., Swiss Federal Court Judgment of 29

March 2018, 5A_962/2017 E. 5.1. In determining whether

there are actual and concrete reasons for suspicion, the

Court only considers the circumstances existing at the

time of the transaction. Declaration of Dr. Wolfgang Ernst

[Docket No. 396] at ¶¶ 42-43.

45a

Supplemental Appendix

$ 7KHUHZHUHVXIÀFLHQWVXVSLFLRXVFLUFXPVWDQFHV

RU´UHGÁDJVµVXFKWKDWWKH%DURQKDGDGXW\

to investigate.

7KH&RXUWÀQGVWKDWWKHUHZHUHVXIÀFLHQWVXVSLFLRXV

FLUFXPVWDQFHVRU´UHGÁDJVµZKLFKVKRXOGKDYHSURPSWHG

the Baron to conduct additional inquiries as to the seller’s

title. Specifically, the Court finds that the following

circumstances, when considered together, should have

caused the Baron, a sophisticated art collector, to conduct

additional inquiries: (1) the presence of intentionally

removed labels and a torn label demonstrating that the

Painting had been in Berlin; (2) the minimal provenance

information provided by the Stephen Hahn Gallery, which

included no information from the crucial World War II era

and which, contrary to the partial label, did not show that

the Painting had ever been in Berlin or Germany;21 (3)

the well-known history and pervasive nature of the Nazi

ORRWLQJRIÀQHDUWGXULQJWKH:RUOG:DU,,DQG  WKHIDFW

that Pissarro paintings were often looted by the Nazis.

0RVWLPSRUWDQWO\WKH&RXUWÀQGVWKDWWKHSUHVHQFHRI

intentionally-removed labels should have been suspicious

to the Baron. According to Plaintiffs’ expert Dr. Jonathan

Petropoulos, “[t]here is no legitimate reason to tear off

[ ] labels as they serve the dual purpose of fortifying

an artwork’s authenticity and increasing its value. The

21. The Court acknowledges that the minimal provenance

information provided by Stephen Hahn, by itself, would not be cause

for concern. In the 1970s, provenance was usually only referenced

if tied to a distinguished or remarkable collection. See Declaration

of Laurie A. Stein [Docket No. 412] at ¶¶ 30, 145.

46a

Supplemental Appendix

UHPRYDORIVXFKODEHOVLVOLNHÀOLQJRIIWKHVHULDOQXPEHU

RQDVWROHQJXQ³FOHDUFDXVHIRUFRQFHUQµ'HFODUDWLRQRI

Jonathan Petropoulos [Docket No. 417] at ¶ 114. According

to TBC’s expert Lynn Nicholas, on the other hand, the fact

that “some labels have been removed or have fallen off in

the course of the 100 years since the Painting was created”

is “normal.” Declaration of Lynn Nicholas [Docket No. 399]

at ¶ ´/DEHOVDUHDIÀ[HGIRUPDQ\UHDVRQV7KH\DUH

not proof of ownership, exhibition or sale. Many dealers

put one on each time a work passes, even temporarily,

through their hands in order to keep track of inventory.

2WKHU ODEHOV DUH DIÀ[HG IRU H[KLELWLRQV DQG VKLSSLQJ

by conservators, for estate purposes and for auctions.

Museums normally have their own labels placed by their

registrars.” Declaration of Lynn Nicholas [Docket No.

399] at ¶ 43. Ms. Nicholas, however, never satisfactorily

explained why such labels would be intentionally removed.

Likewise, TBC’s expert Laurie A. Stein never

satisfactorily explained why labels would be intentionally

removed. According to Ms. Stein, “[i]n provenance

research, any trace information from extant labels and

markings is an important source of information, a bonus

WKDWFDQOHDGWRNH\ÀQGLQJVRQRFFDVLRQ+RZHYHUJLYHQ

the nature of the label materials and the passage of time,

loss of labels and illegibility of verso information is not

FRQVLGHUHG D ¶UHG ÁDJ·´ 'HFODUDWLRQ RI /DXULH $ 6WHLQ

[Docket No. 412] at ¶ 185. Ms. Stein’s direct testimony

was limited to the “loss of labels” and “illegibility of

YHUVRµLQIRUPDWLRQDQGIDLOHGWRVSHFLÀFDOO\DGGUHVVWKH

intentional removal of labels. In addition, when crossexamined, Ms. Stein carefully worded her answers in an

47a

Supplemental Appendix

effort to avoid this issue. When asked if people regularly

´UHPRYHµ ODEHOV IURP SDLQWLQJV VKH WHVWLÀHG ´>L@Q P\

H[SHULHQFH RYHU WKH KXQGUHG \HDUV RU VR WKDW³RI D

painting’s existence and the many places that a painting

has been, where it has been exhibited or who’s had it,

there are many instances where labels are no longer

present that were once present.” Trial Tr. at 123:8-14

(emphasis added). When asked if it would be suspicious

LIODEHOVZHUHUHPRYHGIURPDSDLQWLQJ0V6WHLQWHVWLÀHG

“[n]ot necessarily, no.” Trial Tr. at 123:2-7. Ultimately, she

conceded that a label which is removed or scraped off could

be suspicious under certain circumstances, and that one

would have to investigate or learn why those labels had

been removed, where the work had been, and what those

labels might have been. Trial Tr. at 123:15-124:12. Based

on Dr. Petropoulos’s unequivocal testimony and the failure

of TBC’s experts to directly confront this issue, the Court

ÀQGVWKDWDQLQWHQWLRQDOO\UHPRYHGRUWRUQODEHOVKRXOG

have, at the very least, raised some suspicion in the Baron,

especially in the post-World War II era. That suspicion

should have been heightened by the fact that there was

a torn label demonstrating that the Painting had been in

Berlin, that the minimal provenance information provided

by the Stephen Hahn Gallery did not mention that the

Painting had ever been in Germany, and that there was

no provenance information available for the World War

II period.

In addition, the fact that the Painting was painted

by Camille Pissarro should have also heightened the

Baron’s suspicions. According to Plaintiffs’ expert Dr.

Petropolous, Pissarro paintings were “immediately

48a

Supplemental Appendix

of suspect provenance” because they were favored by

European Jewish collectors and often looted by the Nazis.

Declaration of Jonathan Petropolous [Docket No. 417] at

¶¶ 86-96. Indeed, as noted by Dr. Petropolous, the French

Ministry of Culture in 1947 published a compendium of

French cultural losses during World War II that included

forty-six works by Pissarro that were looted by the Nazis

(and have yet to be recovered). 22 Id. at ¶ 93.

Finally, it is undisputed that the Baron was a very

sophisticated art collector. The Baron’s “familiarity with

[the art] segment is important with regard to the diligence

22. Although TBC’s expert Lynn Nicholas disputed the fact

that Pissarro paintings were “immediately of suspect provenance,”

the Court finds that her opinion was not well supported. For

example, she claimed that “[a]nalysis of collections worldwide do

not indicate that Pissarro’s works have been collected more by Jews

than by others.” Declaration of Lynn Nicholas [Docket No. 399] at

¶ 60. However, a current analysis of collections worldwide does not

necessarily mean that Pissarro works were not historically favored

by European Jewish collectors, especially considering that more than

70 years have passed since the end of World War II and, even more

importantly, that works belonging to European Jewish collectors

were plundered during the war. She also claimed that “evidence

does not support the allegation that more Pissarros were stolen by

the Nazis than anything else,” citing the fact that, in the Répertoire

des Bien Spoliés, the 715 page listing of art looted in France, there

are 66 works by Renoir (who, unlike Pissarro, was not Jewish) and

46 by Pissarro. Declaration of Lynn Nicholas [Docket No. 399] at

¶ :LWKRXWNQRZLQJKRZSUROLÀFHDFKRIWKHDUWLVWVZHUHWKLVGRHV

little to demonstrate that Pissarro works were not more frequently

looted by the Nazis than Renoir works. Moreover, this evidence may

simply mean that Renoir works were also often frequently looted

by the Nazis.

49a

Supplemental Appendix

requirements imposed on him.” Swiss Federal Court

Judgment of 18 April 2013, BGE 139 III 305, E. 5.2.2

(English translation). Because he was a sophisticated art

collector, the Baron would have recognized and understood

the suspicious circumstances surrounding the Painting.

After carefully considering all of the evidence

presented on this issue, the Court concludes that there

ZHUHVXIÀFLHQWO\VXVSLFLRXVFLUFXPVWDQFHVWRWULJJHUDGXW\

WRLQYHVWLJDWHXQGHU6ZLVVODZ,QGHHGWKH&RXUWÀQGVLW

HVSHFLDOO\VLJQLÀFDQWWKDWWKHVHVDPHIDFWVNQRZQWRWKH

Frank Perls Gallery and Knoedler in 1951 (in addition

to Frank Perls’ knowledge that the Painting was being

sold from Herr Urban’s collection in Munich, Germany)

DSSHDUWRKDYHEHHQVXIÀFLHQWWRWULJJHUWKHLUVXVSLFLRQV

and led them to inquire as to whether the Painting was

a looted or stolen artwork. The Court acknowledges that

there were other circumstances surrounding the sale

of the Painting that were not suspicious, including, for

example, the respected reputation of the Stephen Hahn

Gallery at the time23 and the price that the Baron paid for

the Painting. However, these circumstances, while they

tend to demonstrate that the Baron did not have actual

knowledge that the Painting was stolen, do not outweigh

the other suspicious circumstances triggering a duty to

investigate.

23. The Stephen Hahn Gallery has sold at least one other work

looted by the Nazis. However, that fact would not have been known

to the Baron in 1976.

50a

Supplemental Appendix

B. The Baron failed to exercise the diligence

required by the circumstances

Despite the Baron’s duty to inquire further regarding

the provenance of the Painting, there is no evidence that

the Baron took any steps to allay any suspicions that he

may have had. However, “the failure to pay due attention

is only important, if it is causal for the lack of knowledge

about the defect of title; otherwise, it is negligible.”

Swiss Federal Court Judgment of 18 April 2013, BGE

139 III 305, E. 3.2.2 (English translation). In other words,

“[a]ccording to decisions of the Federal Supreme Court

of Switzerland, failure to undertake research may only

be construed as the lack of good faith, if the applicable

SUHFDXWLRQV ZRXOG KDYH OHG WR XQFRYHULQJ WKH GHÀFLHQW

disposal authorization of the seller.” Id. at E. 5.4.2. This

causation requirement has been interpreted to mean

that the “research measure under consideration must be

objectively suitable to discover the defect in the disposal

authorization.” Id. at E 5.4.2 and E 5.4.3 (emphasis added).

See also Swiss Federal Court Judgment of 29 March 2018,

5A_962/2017 E. 5.2; Declaration of Dr. Wolfgang Ernst

[Docket No. 396] at ¶¶ 89, 91. “However, the hypothetic

result of such investigations does not matter. It may very

well be that the objectively suitable investigations could

QRWKDYHVROLGLÀHGWKHVXVSLFLRQV,QRWKHUZRUGVWKHRQH

who does not undertake seemingly suitable and reasonable

measures, cannot rely on his good faith.” Swiss Federal

Court Judgment of 29 March 2018, 5A_962/2017 E. 5.2

(English translation).

7KH &RXUW ÀQGV WKDW WKH %DURQ IDLOHG WR FRQGXFW

suitable and reasonable inquiries in order to discover

51a

Supplemental Appendix

WKHVHOOHU·VODFNRIWLWOH6SHFLÀFDOO\LWZRXOGKDYHEHHQ

suitable and reasonable for the Baron (or one of his

employees) to contact John Rewald, a noted expert on

Pissarro, in an attempt to determine if the Painting had

been stolen. Rewald would have been a logical source of

information as he had recently published a study called

Camille Pissarro and was responsible for updating the

1939 Catalogue Raisonné. Rewald was known to the

Baron, as Rewald visited the Baron’s collection at the

Baron’s home in Switzerland in July 1976, just three

months before the Baron purchased the Painting.24 None of

TBC’s experts dispute that it would have been reasonable

for the Baron to contact Rewald. Cf. Declaration of Lynn

Nicholas [Docket No. 399] at ¶¶ 138-139; Declaration of

Laurie A. Stein [Docket No. 412] at ¶ 197; Declaration of

Wolfgang Enrst [Docket No. 396] at ¶¶ 88-109.

Had the Baron contacted Rewald (or even another art

expert who might have referred the Baron to Rewald),

he might have learned that the Painting was stolen from

Lilly by the Nazis. Whether such an inquiry would have,

in fact, revealed that the Painting was stolen will never

be known, but it is also irrelevant. Because the Baron did

not undertake such a suitable and reasonable measure,

he cannot rely on his good faith. See Swiss Federal

Court Judgment of 29 March 2018, 5A_962/2017 E. 5.2

(English translation) (“Whether such inquiries would

24. In fact, as noted supra, in 1989, Irene Martin, the

Administrative Director and Curator of the Baron’s collection,

contacted Rewald, inviting him to curate an exhibition at Villa

)DYRULWD DQG WR SUHSDUH D ´VFKRODUO\ DQG VFLHQWLÀFµ FDWDORJXH RQ

certain paintings in the collection, including the Painting.

52a

Supplemental Appendix

have substantiated the suspicion or not, does not need to

EHFODULÀHGEHFDXVHWKH'HIHQGDQWZKRGLGQRWXQGHUWDNH

any measures, which would have seemed adequate and

reasonable, cannot rely on his good faith.”).

Indeed, the Federal Supreme Court of Switzerland, in

a case involving the stolen painting, “Diener mit Samowar”

by Russian artist Kasimir Malewitsch, concluded as

follows:

In this case, the primary issue is the

question whether appellee had to engage H. or

RWKHUH[SHUWVIRUIXUWKHUFODULÀFDWLRQV

Contrary to the appraisal of the appellate

court, this is the case. After appellee heard

from H., who he engaged himself as art expert,

of a rumor about a painting of Malewitsch,

which had been stolen but which is on the

market, there would not be any question

but to ask H. or any other expert for more

information about this rumor or to research

this matter further. The measures H. would

have undertaken are immaterial in this context;

retrospectively, it can only be speculated about

them. In addition, it does not matter that he did

QRW NQRZ 1 DQ H[SHUW ZKR YHULÀDEO\ NQHZ

DERXW WKH WKHIW  ,W LV VXIÀFLHQW WKDW DW WKDW

former point in time, engaging one or several

experts would have been objectively a suitable

(if not even the best) and reasonable action

WR WDNH LQ RUGHU WR ÀQG RXW PRUH DERXW WKH

UXPRUDQGDQ\GHÀFLHQFLHVFRQFHUQLQJVHOOHU·V

53a

Supplemental Appendix

authorization to sell. Appellee at least knew

+DVH[SHUWZKR³LIVKHFRXOGQRWWDNHFDUH

of the respective mandate of appellee would

OLNHWRHQJDJHVRPHRQHHOVHIRULW³FRXOGKDYH

referred him without any problems to another

expert, provided he, as art collector, did not

already know them. This hypothetic result of

such research does not matter as it can be the

case that such investigations would not have

substantiated the rumor and its connection with

the painting “Diener mit Samowar”. Appellee

would have then trusted this information even

if they would have been objectively wrong.

If this would have dispelled and should have

dispelled his concerns, his good faith would

have had to be protected because he applied all

necessary diligence to investigate the rumor.

If, on the other hand, he would have found out

that the rumor actually concerns the painting

´'LHQHUPLW6DPRZDUµWKHQDSSHOOHH³LIKHGLG

not want to restrain from the purchase under

WKHVH FLUFXPVWDQFHV³ZRXOG KDYH GHPDQG

[sic] precise proof that seller is entitled to sell

despite the earlier theft of the work (e.g., good

faith purchase abroad).

Because appellee did not undertake this

measure, which seems suitable and reasonable,

must lead to the conclusion that he cannot base

it on his good faith.

Swiss Federal Court Judgment of 18 April 2013, BGE 139

III 305, E 5.4.3 (English translation).

54a

Supplemental Appendix

Similarly, because the Baron did not undertake any

reasonable and suitable measures, such as contacting

Rewald or another art expert to allay any suspicions he

may (and should) have had, the Court concludes that the

Baron did not possess the Painting in good faith and thus

the Baron (and Favorita) did not acquire good title to the

Painting under Swiss law. Accordingly, because the Baron

(and Favorita) did not have good title to the Painting at

the time of TBC’s purchase, the Court concludes that TBC

did not become the lawful owner of the Painting via the

1993 Acquisition Agreement. 25

25. The Court does not address the many other measures

that the Baron could have taken, such as asking the Stephen Hahn

Gallery for more information regarding the Painting’s provenance,

investigating the partial label from the Cassirer gallery on the verso

of the Painting, or searching lists of stolen artworks, because the

&RXUWÀQGVWKDWVXFKPHDVXUHVZRXOGQRWKDYHOHGWKH%DURQLQ

to discover that the Painting was stolen from Lilly. “[T]he failure

to pay due attention is only important, if it is causal for the lack of

knowledge about the defect of title; otherwise, it is negligible.” Swiss

Federal Court Judgment of 18 April 2013, BGE 139 III 305, E. 3.2.2

(English translation). In any event, there is no evidence that the

Baron undertook any of these measures, and thus TBC cannot rely on

them. See Declaration of Dr. Wolfgang Ernst [Docket No. 396] at ¶ 89

(“The good-faith presumption cannot be relied upon, if measures of

inquiry were omitted, which at the time would have been considered

‘apparently suitable and reasonable’ . . . . If this were the case, the

counter-argument, relying on a counter-factual hypothetical, that

such inquiry would have led to nothing, is not heard.”).

55a

Supplemental Appendix

II. T BC AC QU I R ED OW N ER SH I P OF T H E

PA I N T I N G U N DE R S PA I N ’ S L AW S OF

ACQUISITIVE PRESCRIPTION.

However, the Court concludes, based on all of the

evidence, that TBC acquired lawful ownership of the

Painting under Spain’s laws of acquisitive prescription.

Spanish Civil Code Article 1955 provides in relevant

part: “Ownership of movable property prescribes by

three years of uninterrupted possession in good faith.

Ownership of movable property also prescribes by six

years of uninterrupted possession, without any other

condition. . . .” Spanish Civil Code Art. 1955 (English

WUDQVODWLRQ 3RVVHVVLRQLVGHÀQHGLQ$UWLFOHZKLFK

states: “Possession must be in the capacity of the owner,

and must be public, peaceful, and uninterrupted.” Spanish

Civil Code Art. 1941 (English translation).

“Read alone, Article 1955 would seem to vest title in

one who gained possession, even absent good faith, after

six years, so long as the possession was in the capacity as

owner, public peaceful, and uninterrupted.” Cassirer, 862

F.3d at 965. As the Court held in its Order Granting TBC’s

Motion for Summary Judgment on June 4, 2015 [Docket

No. 315], and as the Ninth Circuit held in Cassirer, 862

F.3d at 965, TBC has possessed the property as owner

publicly, peacefully, and without interruption for more

than 6 years (from 1993 to at least 1999). “Thus, Article

1955, read in isolation, would seem to bar the Cassirers’

action for recovery of the Painting.” Cassirer, 862 F.3d

at 965.

56a

Supplemental Appendix

“But the very next article in the Spanish Civil Code,

Article 1956, modifies how acquisitive prescription

operates.” Id. Article 1956 provides:

Movable property purloined or stolen may

not prescribe in the possession of those who

purloined or stole it, or their accomplices or

accessories [encubridores], unless the crime

or misdemeanor or its sentence, and the action

to claim civil liability arising therefrom,

should have become barred by the statute of

limitations.

Spanish Civil Code Art. 1956 (English translation).

“ Therefore, as to any principals, accomplices, or

accessories . . . to a robbery or theft, Article 1956 extends

the period of possession necessary to vest title to the time

prescribed by Article 1955 plus the statute of limitations

on the original crime and the action to claim civil liability.”

Cassirer, 862 F.3d at 966 (citing Spanish Supreme Court

decision of 15 July 2004 (5241/2004)).

Plaintiffs claim that TBC was an accessory (or

encubridor) to the theft of the Painting. The Ninth Circuit

concluded:

For the crime of encubrimiento (accessory

after the fact) and the crime of receiving

stolen property, the two crimes the Cassirers

argue TBC committed when it purchased the

Painting from the Baron in 1993, the criminal

OLPLWDWLRQVSHULRGLVÀYH\HDUV3HQDO&RGH

57a

Supplemental Appendix

Articles 30, 113, 546(bis)(a) and 1995 Penal Code

Articles 131, 298, and the civil limitations period

LVÀIWHHQ\HDUV-XGJPHQWRI-DQXDU\

(RJ 1982/184) and Judgment of July 15, 2004

(no. 5241/2004). Thus, if Article 1956 applies,

including the six-year period from Article

1955, TBC would need to possess the Painting

for twenty six years after 1993, until 2019, to

acquire title via acquisitive prescription. Since

the Cassirers petitioned TBC for the Painting

LQDQGÀOHGWKLVDFWLRQLQif Article

1956 applies, TBC has not acquired prescriptive

title to the Painting.

Cassirer, 862 F.3d at 966 (emphasis in original) (footnote

omitted). Accordingly, if Article 1956 applies, Plaintiffs

own the Painting. If Article 1956 does not apply, TBC

owns the Painting.

For the reasons that follow, the Court concludes

that Article 1956 does not apply and that TBC owns the

Painting pursuant to Article 1955.

A.

TBC is not an “accessory” or encubridor under

Article 1956.

“Article 1956 extends the time of possession required

for acquisitive prescription only as to those chattels (1)

robbed or stolen [or otherwise misappropriated] from

the rightful owner (2) as to the principals, accomplices

or accessories after the fact (‘encubridores’) with actual

knowledge of the robbery or theft.” Cassirer, 862 F.3d

58a

Supplemental Appendix

at 966 (footnote omitted). The parties agree that the

ÀUVWUHTXLUHPHQWLVVDWLVÀHGLHWKDWWKH3DLQWLQJZDV

misappropriated from Lilly by Scheidwimmer and the

Nazis. With respect to the second requirement, the

parties disagree as to whether TBC is an “accessory” or

“encubridor” within the meaning of Article 1956. 26

As the Ninth Circuit held, the term “accessory” or

“encubridor” in Article 1956 has the meaning that term

was given it in Spain’s 1870 Penal Code. Cassirer, 862

F.3d at 967-68. Under the 1870 Penal Code, “a person can

be encubridor within the meaning of Article 1956 if he

NQRZLQJO\ UHFHLYHV DQG EHQHÀWV IURP VWROHQ SURSHUW\µ

Id. 7%& KDV FOHDUO\ EHQHÀWWHG IURP LWV SRVVHVVLRQ RI

the Painting by displaying it at the Museum. The Court,

however, must resolve, based on the evidence presented

at trial, whether TBC knowingly received stolen property,

DQGPRUHVSHFLÀFDOO\ZKHWKHU7%&KDGactual knowledge

that the Painting was the product of robbery or theft. See

Cassirer, 862 F.3d at 968 n.17 (citing Spanish Supreme

Court decision of 23 December 1986 (RJ 1986/7982)).

Plaintiffs have the burden of proving TBC’s actual

knowledge.

Actual knowledge requires “willful intent” (dolo)

and may be proven directly (dolo directo) or indirectly

(dolo eventual). 27 See, e.g., Declaration of Adriana de

26. it is undisputed that TBC was not a principal or accomplice

to the 1939 misappropriation of the Painting.

27. For the reasons stated in the Declaration of Adriana de Buerba

[Docket No. 402] at ¶¶ 57-64, the Court rejects Alfredo Guerrero

59a

Supplemental Appendix

Buerba [Docket No. 402] at ¶ 57; Declaration of Alfredo

Guerrero Righetto [Docket No. 431] at § 3.1. As the

Spanish Supreme Court has held, the crime of receiving

stolen property “is a crime that is necessarily carried out

with intent, and may be committed both by direct intent

(certain knowledge of the illegal origin of the items) and

by future malicious intent, when the recipient of stolen

goods acts despite it being considered highly probable

that the goods have their origin in a property crime or

socioeconomic crime; in other words, when the illegal

origin of the stolen goods received appears to be highly

probable, in light of the circumstances involved.” Spanish

Supreme Court Judgment of May 19, 2016 (no. 429/2016))

(English translation). “The Spanish Supreme Court does

not require exact, thorough or comprehensive knowledge

about the previous offense but a state of certainty which

entails knowing beyond mere suspicion or conjecture.”

Declaration of Adriana de Buerba [Docket No. 402] at

¶ 55 (citing Supreme Court Judgment of June 9, 1993 (no.

3818/1993), and Supreme Court Judgment of November

20, 1995 (no. 5853/1995)). See also Declaration of Alfredo

Guerrero Righetto [Docket No. 431] at § 3.3(A).

“Willful blindness” may also satisfy the actual

knowledge requirement. In order to prove willful

blindness, Plaintiffs must prove that: (1) TBC was aware

that there was a high risk or likelihood that its conduct was

illegal; (2) TBC completely disregarded that risk and did

Righetto’s opinion that “gross negligence” or “recklessness,” (i.e.,

imprudencia temeraria  PD\ EH VXIÀFLHQW WR GHPRQVWUDWH DFWXDO

knowledge, to the extent that his use of those terms implies a

standard less than “dolo eventual” or “willful blindness”.

60a

Supplemental Appendix

not act with the minimum diligence required; and (3) TBC

REWDLQHGHFRQRPLFSURÀWDQGWKHUHIRUHZLVKHGWRUHPDLQ

ignorant. Declaration of Adriana de Buerba [Docket No.

402] at ¶ 65. See also Spanish Supreme Court Judgment

of March 16, 2012 (RJ 2012/5012).

1.

TBC did not have “actual knowledge” that

the Painting was stolen.

After considering all of the evidence presented by the

parties, the Court concludes that Plaintiffs have failed

to demonstrate that TBC had actual knowledge that the

3DLQWLQJZDVVWROHQSURSHUW\7KH&RXUWÀQGVWKDW7%&

lacked actual knowledge, especially in light of the following

evidence: (1) but for the 1954 CORA decision (which would

KDYH EHHQ YLUWXDOO\ LPSRVVLEOH WR ÀQG  WKHUH ZDV QR

published information about Lilly’s prior ownership of the

Painting or that the Nazis had looted it at the time TBC

acquired the Painting; (2) the Kingdom of Spain (and TBC)

REWDLQHGOHJDORSLQLRQVIURPUHSXWDEOHODZÀUPVWRHQVXUH

that the Baron held good title and that the conveyance

was lawful; (3) the Kingdom of Spain and TBC (and their

counsel) were not aware of any facts demonstrating that

the Baron had acted in bad faith in acquiring any of

the paintings in the Collection; (4) with respect to the

paintings that counsel did investigate, counsel did not

discover any evidence that the paintings were stolen or

that the Baron had acquired them in bad faith; (5) the

Kingdom of Spain and TBC were aware that the Baron

had publicly displayed and exhibited the Collection, and

yet were not aware of any adverse title claims having

been made on any of the paintings in the Collection; (6)

61a

Supplemental Appendix

Favorita represented and warranted to TBC that it was

“the legal owner” of the artworks in the Collection and

WKDW7%&ZRXOGEHFRPH´WKHDEVROXWHEHQHÀFLDORZQHUµRI

those artworks, including the Painting; (7) the $350 million

paid for the entire Collection, including the Painting, was

reasonable taking into account the restrictions placed

on the purchase and sale of the Collection and TBC’s

obligations under the Acquisition Agreement; and (8) TBC

has publicly exhibited the Painting at the Museum since

1992 (with the expectation that the Museum would have

millions of visitors).

This evidence fails to demonstrate that TBC had

dolo directo or dolo eventual, or that TBC was willfully

blind. Indeed, although TBC’s legal counsel decided not to

conduct any investigation into the title or provenance of the

Painting, it does not appear that they made that decision

because they were afraid of learning the truth or because

they believed (or the circumstances demonstrated) that

there was a high risk or probability that the Painting

was stolen. Rather, legal counsel made this decision after

careful consideration of various options for the scope of

their title investigation. They believed that the risk was

low that pre-1980 paintings had title issues because:

(1) the Baron would have acquired ownership of those

paintings via the Swiss laws of acquisitive prescription

if he had acquired them in good faith; and (2) “any fraud

or theft affecting title to the paintings which had taken

place before the paintings were acquired by the family

would be unlikely to affect more than a single painting, or

a small group of paintings,” see Trial Exhibit 223 at 48990, because “presumably [the paintings] will on the whole

62a

Supplemental Appendix

have been purchased on a ‘piece meal’ basis from different

owners,” see Trial Exhibit 84. Plaintiffs heavily criticize

the Kingdom of Spain and TBC’s counsel for assuming

that the Baron acted in good faith without conducting

DQ\LQYHVWLJDWLRQ7KH&RXUWÀQGVKRZHYHUWKDWFRXQVHO

had a sound basis for that assumption. Indeed, even

though the Baron had publicly displayed and exhibited the

Collection, there were no adverse title claims made on any

of the paintings in the Collection at the time. Moreover,

with respect to the paintings that counsel did investigate,

counsel did not discover any evidence that the paintings

were stolen or that the Baron had acquired them in bad

faith.

The Kingdom of Spain and TBC’s counsel did

recognize that there was a risk that a painting or small

number of paintings could have a title issue, and decided

to cover that “hypothetical” risk by obtaining the pledge

or prenda. But recognizing that a minor risk exists does

not equate to dolo eventual or “willful blindness.” The

evidence presented at trial simply failed to demonstrate

that TBC was aware of, or that the circumstances

demonstrated, a high risk or probability that a painting

or the Painting was stolen.

Moreover, the Court concludes that, although the

SUHVHQFH RI WKH ´UHG ÁDJVµ LGHQWLÀHG supra (i.e., the

intentionally removed labels, the minimal provenance

information provided, the partial label demonstrating that

the Painting had been in Berlin, and the fact that Pissarros

were frequently the subject of Nazi looting) might have

EHHQVXIÀFLHQWWRUDLVH7%&·Vsuspicions with respect to

63a

Supplemental Appendix

the Painting, they fall well short of demonstrating TBC’s

“actual knowledge,” i.e. that TBC had certain knowledge

that the Painting was stolen, or that there was a high

risk or probability that the Painting was stolen. In other

words, although failing to investigate the provenance of

the Painting may have been irresponsible under these

circumstances, the Court concludes that it certainly was

not criminal.

2.

The Baron did not have “actual knowledge”

that the Painting was stolen.

Plaintiffs argue, under Spanish law, that the Baron’s

actual knowledge can be imputed to TBC. The Court need

not resolve that issue of Spanish law, because the Court

ÀQGVWKDWWKH%DURQGLGQRWKDYHDFWXDONQRZOHGJHWKDWWKH

3DLQWLQJZDVVWROHQ6SHFLÀFDOO\WKHIROORZLQJHYLGHQFH

DPSO\VXSSRUWVWKH&RXUW·VÀQGLQJWKDWWKH%DURQODFNHG

actual knowledge: (1) the Baron paid fair market value for

the Painting in 1976; (2) the Baron purchased the Painting

from the Stephen Hahn Gallery, which was a reputable

art dealer; (3) the Painting was part of a public exhibition

at the Stephen Hahn Gallery when the Baron purchased

it; (4) the Baron publicly and frequently exhibited the

Painting in various locations around the world; and (5) in

1976, but for the 1954 CORA decision (which would have

EHHQYLUWXDOO\LPSRVVLEOHWRÀQG WKHUHZDVQRSXEOLVKHG

information about Lilly’s prior ownership of the Painting

or that the Nazis had looted it. Again, although the “red

ÁDJVµ VKRXOG KDYH UDLVHG WKH %DURQ·V suspicions, they

fall well short of demonstrating the Baron’s “actual

knowledge,” i.e. that the Baron had certain knowledge

64a

Supplemental Appendix

that the Painting was stolen, or that there was a high risk

or probability that the Painting was stolen.

%HFDXVH WKH &RXUW ÀQGV WKDW QHLWKHU 7%& QRU WKH

Baron, had actual knowledge that the Painting was stolen,

the Court concludes that TBC is not an “accessory”

(or encubridor) and that Article 1956 is not applicable.

Because Article 1956 is not applicable, the Court concludes

that TBC acquired ownership of the Painting under

Article 1955. See Order Granting TBC’s Motion for

Summary Judgment on June 4, 2015 [Docket No. 315];

Cassirer, 862 F.3d at 965.

B. TBC’s Remaining Arguments Regarding the

Applicability of Article 1956 Fail as a Matter

of Law.

In light of the Court’s determination that TBC is not

an accessory or encubridor for the purposes of Article

1956, the Court need not address TBC’s remaining

arguments as to why Article 1956 is inapplicable. However,

given that the parties will certainly pursue additional

appellate review, and in the interest of a complete record,

the Court considers TBC’s remaining legal arguments.

TBC argues that Article 1956 cannot apply as a

matter of law because: (1) it has not been charged with, or

convicted of, a predicate crime; and (2) it is a legal person,

rather than an individual. 28

28. TBC did not raise these issues as to the inapplicability of

Article 1956 until TBC’s Petition for Rehearing and Rehearing En

65a

Supplemental Appendix

1.

Article 1956 does not require a criminal

conviction.

The Court concludes that Article 1956 does not require

a criminal conviction. Indeed, the clear statutory language

demonstrates that a criminal conviction is not required.

As noted supra, Article 1956 provides:

Movable property purloined or stolen may

not prescribe in the possession of those who

purloined or stole it, or their accomplices or

accessories, unless the crime or misdemeanor,

or its sentence, and the action to claim civil

liability arising therefrom, should have

become barred by the statute of limitations.

Spanish Civil Code Art. 1956 (2013) (English translation)

(emphasis added).

In accordance with the Spanish rules of statutory

construction, the Court construes Article 1956 “according

to the proper meaning of [its] wording and in connection

with the context, with [its] historical and legislative

background and with the social reality of the time in

which [it is] to be applied, mainly attending to [its] spirit

Banc or until after the most recent remand to this Court. Plaintiffs

claim that the Court’s consideration of these two new arguments

are barred by the mandate rule, the law of the case doctrine, and/

or because TBC waived or forfeited these arguments. The Court

need not address whether TBC’s new arguments are precluded by

any of these doctrines because the Court concludes that TBC’s new

arguments fail as a matter of law.

66a

Supplemental Appendix

and purpose.” Spanish Civil Code Art. 3.1 (English

Translation). The Court concludes that Article 1956 does

not require a conviction according to the “proper meaning

of [its] wording.” Indeed, as persuasively argued by Amici

Curiae Comunidad Judía de Madrid and Federación de

Comunidades Judías de España, the express language of

Article 1956 differentiates between two scenarios:

i. If there is no criminal conviction yet, the

statute of limitation to prosecute the crime or

misdemeanor must have elapsed; or

ii. If there is a criminal conviction, the statute

of limitation to enforce the sentence of guilt for

a crime or misdemeanor must have elapsed.

Brief of Amici Curiae Comunidad Judía de Madrid and

Federación de Comunidades Judías de España [Docket No.

401-1] at 12. 29 “In both cases, the statute of limitations to

claim civil liability arising from the crime or misdemeanor

must also have elapsed. . . .” Id.

29. Article 1956’s adoption of these two alternatives for

determining when a principal, accomplice, or accessory can acquire

property through acquisitive prescription is not surprising, given

WKDW WKH 6SDQLVK 3HQDO &RGH LGHQWLÀHV SUHVFULSWLRQ RI WKH FULPH

and prescription of the sentence as different ways of extinguishing

FULPLQDOOLDELOLW\6SHFLÀFDOO\$UWLFOHRIWKH6SDQLVK3HQDO

Code, Article 112 of the 1973 Spanish Penal Code, and Article 130

of the 1995 Spanish Penal Code all provide that criminal liability is

extinguished by both prescription of the crime and prescription of

the sentence.

67a

Supplemental Appendix

The Court recognizes that no Spanish court has applied

Article 1956 in absence of a criminal conviction. However,

prominent Spanish legal scholars and commentators

agree that no criminal conviction is required. See, e.g.,

Manuel Albaladejo García, Comentarios Al Código Civil y

Complicaciones Forales, Tomo XXV, Vol. 1 (1993) (“these

individuals are prevented from consummating such

acquisition until the statute of limitations on the crime has

expired; if there was no prosecution for the crime, then the

time-barring of the sentence, which was not imposed, does

not come into play . . . .”); Bercovitz Rodríguez-Cano, R.

(Coord.), Comentario al Código Civil, Thomson Reuters

Aranzadi (4th ed.) (2013), comment on Article 1956, at

2529 (English translation) (“In order for [the Article 1956]

SURKLELWLRQWREHLQHIIHFWQRÀUPFRQYLFWLRQLVUHTXLUHGLQ

the criminal scope. The dismissal of the criminal process

or its extinction by a ruling other than a sentence will

not prevent a civil judge from declaring, if applicable, the

existence of a theft or robbery, though naturally only for

civil purposes.”).

For the foregoing reasons, the Court concludes, as a

matter of law, that Article 1956 does not require a criminal

conviction.

2.

Article 1956 applies to both natural persons

and legal persons.

TBC also argues that a “legal person” or legal entity

cannot be declared to be an accessory or encubridor for

the purposes of Article 1956 of the Spanish Civil Code.

68a

Supplemental Appendix

As a general rule (except with respect to a limited

QXPEHURIRIIHQVHVQRWDWLVVXHKHUH RQO\LQGLYLGXDOV³

DQGQRWOHJDOHQWLWLHV³FDQEHKHOGcriminally liable under

Spanish criminal law. However, Article 1956 is a provision

of the Spanish Civil Code. And, the provisions of the

Spanish Civil Code regulating acquisitive prescription,

including Article 1956, apply to both natural and legal

persons. See Spanish Civil Code A rt. 38 (English

translation) (“Legal entities may acquire and possess

property of all kinds, and contract obligations and exercise

civil and criminal actions, in accordance with the laws and

internal regulations.”); id. at Art. 1931 (“Persons with the

capacity to acquire property or rights by other legitimate

means may also acquire them by prescription.”).

Moreover, if TBC’s interpretation of Article 1956 were

correct, a thief could entirely escape the implications of

Article 1956 simply by making the acquisitions through a

legal entity. Under Spanish rules of statutory construction,

such an absurd interpretation must be rejected. See Teresa

Asunción Jiménez París, Supplementary Sources of Law

and Application of Legal Rules at 88; Spanish Supreme

Court Judgment of November 21, 1994 (RJ 1994/8542).

Accordingly, the Court concludes, as a matter of law,

that Article 1956 can apply to legal entities.

III. LACHES

Finally, TBC argues that Plaintiffs’ claims are barred

by laches or the similar doctrine under Spanish law,

69a

Supplemental Appendix

“Verwirkung.” 30 The Ninth Circuit apparently concluded

that Spanish law applies to this defense. See Cassirer v.

Thyssen-Bornemisza Collection Foundation, 862 F.3d

951, 977 (9th Cir 2017). The Ninth Circuit, however,

also considered whether TBC was entitled to summary

judgment on its laches defense in the event that California

law applied. The Court concludes that, no matter what law

the Court applies to resolve this issue, Plaintiffs’ claims

are not barred.

Verwirkung, like laches, is based on a plaintiff’s

unreasonable or “objectively unfair” delay in bringing

a claim. See Spanish Supreme Court Judgment of

April 26, 2018 (EDJ 2018/54808) (English translation);

Declaration of Mariano Yzquierdo Tolsada [Docket

No. 409] at 25 n.10; Antoni Vaquer, Verwirkung Versus

Laches: A Tale of Two Legal Transplants, 21 Tul. Eur.

Civ. L.F. 53, 61-66 (2006). The doctrine is premised

on the understanding that “[r]ights must be exercised

in accordance with the requirements of good faith.”

Spanish Civil Code Art. 7.1 (English translation). See

also Spanish Supreme Court Judgment of April 26, 2018

(EDJ 2018/54808). In order to apply this doctrine, three

requirements must be met:

30. Plaintiffs argue that the Court may not consider TBC’s

argument that Plaintiffs’ claims are barred by laches or Verwirkung

because: (1) the Ninth Circuit concluded that Spanish law applies,

not California law; and (2) TBC had previously only raised a laches

defense under California law, not Spanish law. The Court need not

resolve this issue, because the Court concludes, on the merits, that

Plaintiffs’ claims are not barred by laches or Verwirkung.

70a

Supplemental Appendix

(1) The passage of a long period of time, during

which the holder of the right remained inactive

without exercising it. Nevertheless, unlike what

occurs with the statute of limitations . . . , the

mere passage of time is not enough, but rather

must be accompanied by circumstances that

make the delay in exercise of the right unfair.

(2) Inactivity by the holder of the right during

that period of time, when they could have

exercised it.

(3) And lastly, . .  D OHJLWLPDWH FRQÀGHQFH LQ

the passive subject that the right would not be

exercised. It must be the holder of the right that

LQVSLUHV WKLV FRQÀGHQFH ZKLFK LPSOLHV PRUH

than mere inactivity.

Spanish Supreme Court Judgment of April 26, 2018 (EDJ

2018/54808) (English translation).

Similarly, “[t]o establish laches a defendant must prove

both an unreasonable delay by the plaintiff and prejudice

to itself.” Couveau v. Am. Airlines, Inc., 218 F.3d 1078,

1983 (9th Cir. 2000) (per curiam). “Ultimately, as an

equitable doctrine, the denial of relief on the basis of laches

is not determined by simple rules of thumb or rigid legal

rules. Rather, it is determined by a consideration of the

circumstances of each particular case and a balancing of

the interests and equities of the parties.” Saul Zaentz Co.

v. Wozniak Travel, Inc., 627 F. Supp. 2d 1096, 1109 (N.D.

Cal. 2008) (quotations and citations omitted).

71a

Supplemental Appendix

7KH&RXUWÀQGVWKDW3ODLQWLIIV·GHOD\LQÀOLQJVXLWZDV

not unfair or unreasonable, and that the balance of equities

favors Plaintiffs. Indeed, the Cassirers moved quickly to

enforce their rights. Three years after the war ended, Lilly

sought physical restitution of the Painting. Ultimately, she

dropped her claim for restitution, and after ten years of

litigation, settled her claim for monetary compensation

in the 1958 Settlement Agreement. Importantly, the

parties to that settlement agreement all believed that the

Painting had been lost or destroyed during the war and

that it was not available for restitution. Accordingly, it was

reasonable for Claude Cassirer to continue to rely on that

belief and, thus, not to search for the Painting. Moreover,

once Claude Cassirer learned that the Painting was not

ORVWRUGHVWUR\HGKHDFWHGSURPSWO\E\ÀOLQJD3HWLWLRQ

with the Kingdom of Spain and TBC in 2001, and then,

after that Petition was denied, an action in this Court

in 2005. Finally, based on the evidence that TBC failed

to conduct any investigation into the provenance of the

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´LQVSLUHOHJLWLPDWHFRQÀGHQFHµLQ7%&WKDWQRRQHZRXOG

seek the Painting’s return.

Accordingly, the Court concludes that the doctrine

of laches or Verwirkung does not bar Plaintiffs’ claim for

return of the Painting.

CONCLUSION

In December 1998, forty-four countries, including

the Kingdom of Spain, committed to the Washington

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72a

Supplemental Appendix

Principles”). These non-binding principles appeal to the

moral conscience of participating nations and recognize:

“If the pre-War owners of art that is found to have

been confiscated by the Nazis and not subsequently

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be taken expeditiously to achieve a just and fair solution,

recognizing that this may vary according to the facts and

circumstances surrounding a particular case.”

In 2009, forty-six countries, including the Kingdom of

6SDLQUHDIÀUPHGWKHLUFRPPLWPHQWWRWKH:DVKLQJWRQ

Principles by signing the Terezin Declaration. The

Terezin Declaration reiterated that the Washington

Principles “were based upon the moral principle that

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Holocaust (Shoah) victims should be returned to them or

their heirs, in a manner consistent with national laws and

regulations as well as international obligations, in order to

achieve just and fair solutions.” The Terezin Declaration

also “encouraged all parties including public and private

institutions and individuals to apply [the Washington

Principles] as well.”

TBC’s refusal to return the Painting to the Cassirers

is inconsistent with the Washington Principles and the

Terezin Declaration. However, the Court has no alternative

but to apply Spanish law and cannot force the Kingdom

of Spain or TBC to comply with its moral commitments.

Accordingly, after considering all of the evidence and the

arguments of the parties, the Court concludes that TBC

is the lawful owner of the Painting and the Court must

73a

Supplemental Appendix

enter judgment in favor of TBC.

Counsel shall meet and confer and prepare a joint

proposed Judgment consistent with these Findings of Fact

and Conclusions of Law. The joint proposed Judgment

shall be lodged with the Court on or before May 6, 2019.

In the unlikely event that counsel are unable to agree upon

a joint proposed Judgment, the parties shall each submit

separate versions of a proposed Judgment along with

a declaration outlining their objections to the opposing

party’s version on or before May 6, 2019.

IT IS SO ORDERED.