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Nordwind v. Rowland

October 16, 2009

THEKLA NORDWIND AND GRETA HOERMAN, PLAINTIFFS-COUNTER-DEFENDANTS-APPELLANTS-CROSS-APPELLEES,
GERALD B. TAYLOR, AS EXECUTOR OF THE ESTATE OF MICHAEL FRANKE, PLAINTIFF-THIRD-PARTY-DEFENDANT-COUNTER-CLAIMANT-COUNTER-DEFENDANT-APPELLANT-CROSS-APPELLEE,
PETER FRANKE-RUTA, COUNTER-CLAIMANT-THIRD-PARTY-DEFENDANT-APPELLANT-CROSS-APPELLEE,
v.
DAVID J. ROWLAND AND ROWLAND & ASSOCIATES, DEFENDANTS-THIRD-PARTY-PLAINTIFFS-COUNTER-DEFENDANT-COUNTER-CLAIMANTS-APPELLEES-CROSS-APPELLANTS,
ROWLAND & PETROFF, DEFENDANT-COUNTER-CLAIMANT-THIRD-PARTY-PLAINTIFF-APPELLEE-CROSS-APPELLANT,
MRS. GRETE HOERMANN, THIRD-PARTY-DEFENDANT-COUNTER-CLAIMANT-APPELLEE-CROSS-APPELLANT,
CLIFFORD CHANCE PARTNERSCHAFTGESELLSCHAFT, COMMISSION FOR ART RECOVERY, INC., WILLY NORDWIND, JR., REED, STOVER & O'CONNOR, P.C. AND SQUIRE, SANDERS & DEMPSEY L.L.P., THIRD-PARTY-DEFENDANTS.



SYLLABUS BY THE COURT

Appeal from a summary judgment entered on October 16, 2007, in the United States District Court for the Southern District of New York (Pogue, J., sitting by designation), in favor of defendants-appellees, dismissing, inter alia, plaintiffs-appellants' claims against their former counsel for legal malpractice, the court having concluded that the plaintiffs failed to show actual injury because, under German law, they would have only been entitled to 50% of the subject inheritance regardless of any malpractice on the part of their counsel.

Affirmed.

The opinion of the court was delivered by: Miner, Circuit Judge

Argued: May 14, 2009

Before: MINER and WESLEY, Circuit Judges, and STANCEU, Judge.*fn2

Thekla Nordwind and Greta Hoerman, plaintiffs-counter-defendants-appellants-cross-appellees, Gerald B. Taylor as executor of the Estate of Michael Franke, plaintiff-third-party-defendant-counter-claimant-counter-defendant-appellant-cross-appellee, and Peter Franke-Ruta, counter-claimant-third-party-defendant-appellant-cross-appellee, (collectively the "plaintiffs" or the "Nordwind Parties"), appeal from a summary judgment entered on October 16, 2007, in the United States District Court for the Southern District of New York (Pogue, J., sitting by designation), in favor of the plaintiffs' former counsel David J. Rowland ("Rowland") and Rowland & Associates, defendants-third-party-plaintiffs-counter-defendants-counter-claimants- appellees-cross-appellants, and Rowland & Petroff, defendant-counter-claimant-third-party-plaintiff-appellee-cross-appellant (collectively, the "defendants"). As relevant to this appeal, the District Court dismissed (1) the Nordwind Parties' claims against the defendants for breach of fiduciary duty, breach of contract, and negligence, as duplicative of the plaintiffs' claim against the defendants for legal malpractice; and (2) the Nordwind Parties' legal malpractice claim against the defendants because, pursuant to German law, the Nordwind Parties would have only been entitled to 50% of the subject inheritance regardless of Rowland's alleged malpractice; and denied (3) the Nordwind Parties' claim of unjust enrichment and request to disqualify Rowland from further representation of clients whose interests in the subject inheritance are adverse to the Nordwind Parties' interests. For the reasons that follow, we affirm the judgment of the District Court.

I. BACKGROUND

A. The Kirstein Assets

Clara and Gustav Kirstein lived in Leipzig, Germany with their two daughters, Gabrielle and Marianna, in the 1930s. They were "a close Jewish family of means." Gustav, who was a renowned art publisher and art collector, died in 1934, leaving a life estate in all of his assets to his wife Clara and the remainder to Marianna and Gabrielle in equal shares.

Before his death, Gustav had experienced the beginnings of Nazi persecution when his business was subjected to a forced sale. Faced with the continuing rise of Nazi power, Clara sent her two daughters to the United States after Gustav's death. Clara, intending to emigrate to the United States after her daughters, remained in Germany to "sell whatever she could of her remaining artwork and business" and to "ship the balance of her artwork and other personal property to . . . New York, where she planned to join [her family]." On June 29, 1939, however, the Nazis confiscated Clara's passport and denied her permission to leave Germany. That night, Clara returned to her home in Leipzig and committed suicide. Thereafter, the Nazis confiscated her assets (the "Kirstein Assets"), which included "the artwork and other property that had been packed for shipment to . . . the United States."

Nearly fifty years later, in 1986, Marianna died in New York State, leaving her son Klaus Baer as the sole heir of her estate. Klaus Baer died in 1987 in the State of Illinois, leaving his residuary estate in a trust benefitting his wife Miriam Reitz Baer ("Miriam Baer"), who survives him, for her lifetime with the remainder to the Oriental Institute of the University of Chicago (the "Oriental Institute").

The other Kirstein daughter, Gabrielle, died in New York State in 1957. She left her estate to her husband, Erich Jacobsen. Erich Jacobsen died in New York State in 1977, and the bulk of his estate passed to his and Gabrielle's son, Godfrey Jacobsen, who was named the residual beneficiary in Erich Jacobsen's will. Godfrey Jacobsen died in New York State in 1980, leaving a substantial amount of his property to Christel Gauger ("Gauger"), a nurse who had been with the Jacobsens for over twenty-seven years. Gauger, who had cared for Godfrey Jacobsen since the time he was fourteen-years old, was named the residual beneficiary of Godfrey Jacobsen's estate. After Godfrey Jacobsen's death, Gauger returned to her home in Germany and resided there until her death, which occurred during the pendency of this appeal.*fn3

B. The Nordwind Parties Seek Restitution

In 1990, Germany enacted the German Property Restitution Law (the "German Property Act"), which provided a limited time for certain persons to assert claims of restitution arising from the illegal confiscation of properties by the Nazi government. See Vermögensgesetz [VermG] [Settlement of Pending Property Claims], Sept. 29, 1990, Bundesgesetzblatt, Teil I [BGBl.I] (F.R.G) (translated). Under the German Property Act, claimants had until December 31, 1992, for real estate claims, and June 30, 1993, for movable property claims, to file for restitution. Qualifying persons, namely, the original owners of the confiscated property or their heirs, who failed to file a claim for restitution by the deadline forfeited their rights. The Conference on Jewish Material Claims Against Germany, Inc. (the "JCC"), succeeded to any unclaimed rights to the confiscated properties. The JCC, in turn, created the "Goodwill Fund" to permit Jewish owners or their heirs who missed the December 31, 1992 and June 30, 1993 filing deadlines under the German Property Act to file claims with the JCC to receive a portion of their restitution claims. The deadline for filing a claim under the Goodwill Fund, as relevant to the events giving rise to this appeal, was December 31, 1998.

In September of 1998, the Nordwind Parties, who are nieces and nephews of Clara Kirstein, became aware of the possibility that they may be entitled to recover restitution for the Kirstein Assets. After conducting research on the Internet, the Nordwind Parties retained defendant Rowland on October 1, 1998, to "file a claim . . . to the Kirstein Assets and to maximize [their] recovery on the claim to the extent possible." Thekla Nordwind provided Rowland with "an exhaustive family tree," "numerous documents from Clara Kirstein, including an exhaustive listing of the Kirstein Assets confiscated from her, her last will and testament, and that of her husband Gustav," and the last will and testament of Klaus Baer, among other documents. In light of the impending December 31, 1998 deadline to file a claim with the JCC Goodwill Fund for restitution, Rowland advised the Nordwind Parties that "all of the heirs or possible heirs, including nieces and nephews of Clar[a] Kirstein, should file a claim with the JCC by the end of this year to preserve all possible rights."*fn4

In November 1998, Rowland identified Miriam Baer as a potential heir to the Kirstein Assets. Although Miriam Baer did not wish to file a claim to the Kirstein Assets for her own benefit, Rowland advised her to do so and she retained him by a letter dated November 27, 1998, to represent her in the restitution claim. Thereafter, based on the information furnished to him by Thekla Nordwind, Rowland obtained a copy of Godfrey Jacobsen's will and identified another potential heir to the Kirstein Assets as Christel Gauger. Rowland then contacted Gauger, informed her of her potential interest in the Kirstein Assets, and offered to represent her in their retrieval. Gauger retained Rowland by a letter agreement dated December 16, 1998.

At no point did Rowland inform the Nordwind Parties of any potential conflicts of interests arising from his representation of persons who might hold interests adverse to the Nordwind Parties. Rowland did inform the Nordwind Parties, however, that "[b]oth Miriam Reitz [Baer] . . . and Christel Gauger have indicated that they may wish to assign their rights to Clar[a] Kirstein's nieces and nephews[, i.e., the Nordwind Parties,] at some time in the future." Rowland had also informed the Nordwind Parties that "only heirs are eligible to file claims under the [German Property Act], a prerequisite status to the assertion of a claim to the JCC Goodwill Fund." Although it is disputed whether Rowland received oral consent from the Nordwind Parties to contact Gauger and offer his services, it is undisputed that Rowland never obtained a written waiver from them to do so.

On December 22, 1998, Rowland filed a restitution claim with the JCC Goodwill Fund on behalf of only Miriam Baer and Gauger as heirs to the Kirstein Assets. The following year, on December 3, 1999, Miriam Baer and the Oriental Institute assigned their interests in the Kirstein Assets to the Nordwind Parties. Gauger, however, refused to assign her interests in the Kirstein Assets to the Nordwind Parties.

In connection with the restitution claims filed with the JCC Goodwill Fund, Rowland also filed applications for Erbscheins (a German certificate of inheritance) to establish, inter alios, Gauger's entitlement to the Kirstein Assets. Although there is a mechanism to contest the issuance of Erbscheins, Rowland did not inform the Nordwind Parties of their right to contest Gauger's Erbschein application. On January 21, 2000, the German Surrogate Court issued three Erbscheins relevant to Gauger's claim to the Kirstein Assets. The German Surrogate Court issued: (1) an Erbschein naming Erich Jacobsen and Godfrey Jacobsen as the heirs of Gabrielle Jacobsen; (2) an Erbschein naming Godfrey Jacobsen as the heir of Erich Jacobsen; and (3) an Erbschein naming Gauger as the heir of Godfrey Jacobsen.*fn5 These Erbscheins were then submitted to the JCC Goodwill Fund in support of Gauger's restitution claim to the Kirstein Assets.

While the JCC claim remained pending, Thekla Nordwind, acting pro se and representing the Nordwind Parties, filed a separate claim in the Claims Resolution Tribunal (the "CRT") in 2001.*fn6 The claim was for Swiss bank account assets that had been confiscated from Clara Kirstein during the Nazi era. With ...


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