Nordwind v. Rowland

07-4862-cv (L), 07-5084-cv (XAP)
Nordwind v. Rowland

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2008

Docket Nos. 07-4862-cv (L), 07-5084-cv (XAP)*

(Argued: May 14, 2009 Decided: 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.,

*
07-5084-cv (XAP) has been withdrawn by the so-ordered stipulation filed 8/11/08.

1
 Third-Party-Defendants.
_____________________________________________________________________________

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

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.

ELLEN R. WERTHER and Bruce J. Ressler, Ressler &
Ressler, New York, New York, for plaintiffs-
counter-defendants-appellants-cross-appellees,
plaintiff-third-party-defendant-counter-claimant-
counter-defendant-appellant-cross-appellee, and
counter-claimant-third-party-defendant-appellant-
cross-appellee.

ANDREW N. KRINSKY and Debra Bodian Bernstein,
Tarter Krinsky & Drogin LLP, New York, New
York, for defendant-third-party-plaintiff-counter-
defendant-counter-claimant-appellees-cross-
appellants, defendant-counter-claimant-third-party-
plaintiff-appellee-cross-appellant.

MINER, Circuit Judge:

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-

**
The Honorable Timothy C. Stanceu, Judge, United States Court of International Trade,
sitting by designation.

2
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

3
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.1

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

1
Although not pertinent to this appeal, Gauger purportedly named her nephew, Dr.
Michael Gauger, as her sole heir.

4
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.”2

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,

2
Rowland suggested to Thekla Nordwind that each of the Nordwind Parties and “other
possible Kirstein heirs” hire him, so that he would “be assured of representing heirs.”
Accordingly, each individual plaintiff retained Rowland by letter agreement.

5
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

6
Erbschein naming Gauger as the heir of Godfrey Jacobsen.3 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

2001.4 The claim was for Swiss bank account assets that had been confiscated from Clara

Kirstein during the Nazi era. With respect to this claim, the District Court described the disputed

underlying events:

[Rowland] claim[s] that Ms. Gauger had consented to Mrs. Nordwind filing at the
CRT, but had not consented to be joined (or to participate at all), and had not
agreed to assign her interest from any recovery to the Nordwind Parties. The
Nordwind Parties contend that Ms. Gauger had agreed to assign her interest to
them, and had agreed to sign over her power of attorney to Mrs. Nordwind, but
that when Mr. Rowland, at the request of Mrs. Nordwind, contacted Ms. Gauger,
the situation ended with Mr. Rowland representing Ms. Gauger [before the CRT].

Nordwind v. Rowland, No. 04-9725, 2007 WL 2962350, at *3 (S.D.N.Y. Oct. 10, 2007).

In February 2003, the JCC Goodwill Fund rendered an award of restitution for the

Kirstein Assets, apparently in the millions of dollars, to Miriam Baer and Gauger in equal shares.

Although the Nordwind Parties would ultimately receive Miriam Baer’s share of the restitution

3
While the appeal was pending, the German Surrogate’s Court revoked the Erbschein
naming Erich Jacobsen and Godfrey Jacobsen as Gabrielle’s heirs because it was discovered that
Gabrielle had not died intestate but left a will leaving her entire estate to Erich. The Nordwind
Parties contend that the Erbschein naming Gauger as Godfrey’s heir therefore has been revoked.
The German Surrogate’s Court, however, never has revoked Gauger’s Erbschein. Nor has it
revoked Godfrey’s Erbschein. Indeed, it makes no difference whether Gabrielle left her entire
estate to Erich by will or whether both Erich and Godfrey inherited Gabrielle’s estate through
intestate succession because Erich leaves his estate to Godfrey in any event. Thus, the revocation
of Gabrielle’s Erbschein does not affect the chain of inheritance of the Kirstein Assets from Erich
to Godfrey and, ultimately, to Gauger.
4
In late 1996 and early 1997, several class action lawsuits were filed in the United States
District Court for the Eastern District of New York against certain Swiss banks for their
involvement in concealing the assets of Holocaust victims. In August 1998, the parties reached
an agreement to settle the lawsuits for $1.25 billion. The CRT, which was created as part of a
plan of distribution for $800 million of the settlement amount, reviews claims by Holocaust
victims (or their heirs) who had deposited money in Swiss banks prior to or during the Second
World War. See generally In re Holocaust Victim Assets Litig., 413 F.3d 183 (2d Cir. 2005); In
re Holocaust Victim Assets Litig., 105 F. Supp. 2d 139 (E.D.N.Y. 2000).

7
award pursuant to the earlier executed December 3, 1999 assignment, the Nordwind Parties were

excluded from the restitution award because the JCC Goodwill Fund did not recognize any

assignment of rights. Following the restitution award, the JCC Goodwill Fund informed the

Nordwind Parties that they “were bound by the claim to the Kirstein Assets filed by Mr. Rowland

and were precluded from filing a new claim, in their own right, to the Kirstein Assets under the

applicable rules of the [JCC].” In December 2003, the Nordwind Parties terminated Rowland as

their representative.

In January 2004, the CRT awarded the Nordwind Parties $130,000 in connection with

their claim to Swiss bank account assets that were confiscated from Clara Kirstein by the Nazis.

After Rowland submitted Gauger’s Erbschein to the CRT and notified the CRT of Gauger’s right

to 50% of the Kirstein Assets, however, the CRT reduced the Nordwind Parties’ award by half to

$65,000. Similarly, after certain artworks which were part of the Kirstein Assets were recovered

and subsequently sold at an auction, the proceeds of the sale were distributed to the Nordwind

Parties and Gauger in equal shares. As a result of these awards and recovery of assets, and in

accord with his retainer agreements, Rowland received a 20% contingent fee from Gauger and, as

well, a 20% contingent fee from the Nordwind Parties in all actions in which Rowland had

represented them.

C. District Court Proceedings

On December 10, 2004, the Nordwind Parties filed a complaint in the District Court

alleging various claims against the defendants related to Rowland’s representation of the

Nordwind Parties. The complaint, as later amended, included causes of action for negligence,

legal malpractice, breach of fiduciary trust, breach of contract, and unjust enrichment. As a

remedy, the complaint demanded compensatory and punitive damages in the amount of

approximately $25 million, disgorgement of all fees paid in connection with the case,

disqualification of defendants from representing Gauger, and an injunction against the defendants

from representing Gauger in the future with respect to her interest in the Kirstein Assets.

8
Following discovery, the parties filed cross-motions for summary judgment.

In a decision dated October 10, 2007, the District Court granted the defendants’ motion

for summary judgment and dismissed the Nordwind Parties’ complaint. Nordwind, 2007 WL

2962350, at *11. After confirming diversity jurisdiction, pursuant to 28 U.S.C. § 1332(a), the

District Court concluded that (1) the Nordwind Parties’ claims of breach of fiduciary duty, breach

of contract, and negligence were duplicative of their claim for legal malpractice; (2) the

Nordwind Parties’ claim for legal malpractice did not involve an actual injury because they

would have received 50% of the Kirstein Assets under the applicable German laws, regardless of

whether Gauger was represented by Rowland or not; and (3) the Nordwind Parties’ unjust
enrichment claim was without merit in light of the court’s dismissal of the underlying legal

malpractice claim. Id. at *4–*9. The District Court also denied the Nordwind Parties’ request to

disqualify Rowland. An amended judgment was entered on October 16, 2007, and a timely

notice of appeal was filed on November 1, 2007.

On December 27, 2007, the parties stipulated to withdraw the appeal because “some

claims remain unadjudicated . . . and no [Fed. R. Civ. P.] 54(b) certification has been granted.”

On May 7, 2008, the District Court issued a memorandum and order stating that the October 16,

2007 judgment was final under 28 U.S.C. § 1291 because all claims by then had been finally

resolved. The appeal was thereafter reinstated on May 28, 2008.

On appeal, the Nordwind Parties argue principally that the District Court erred (1) in

holding that, as a matter of German law, the Nordwind Parties were entitled only to 50% of the

Kirstein Assets; (2) in dismissing the Nordwind Parties’ claim of breach of fiduciary duty on the

finding that it was duplicative of their claim for legal malpractice; and (3) in dismissing all of the

Nordwind Parties’ claims based on the finding that the Nordwind Parties could not, as a matter of

law, demonstrate that they would have prevailed on their legal malpractice claim. The Nordwind

Parties also contend that the District Court abused its discretion in denying their request to

disqualify Rowland from further representing Gauger in relation to any claim to the Kirstein

9
Assets.

II. DISCUSSION
A. Standard of Review

We review the district court’s grant of summary judgment de novo, “examining the facts

in the light most favorable to the non-moving party and resolving all factual ambiguities in that

party’s favor.” Pyke v. Cuomo, 567 F.3d 74, 76 (2d Cir. 2009). We will affirm the judgment

“only if there is no genuine issue of material fact and the moving party is entitled to judgment as

a matter of law.” Id.; see also Fed. R. Civ. P. 56(c). To the extent the District Court’s decision

involves an interpretation of foreign law, our review is de novo. See Fin. One Public Co. v.
Lehman Bros. Special Fin., Inc., 414 F.3d 325, 340 (2d Cir. 2005); see also Fed. R. Civ. P. 44.1

(“The [district] court’s determination [of foreign law] must be treated as a ruling on a question of

law.”).

We review the District Court’s grant or denial of restitution, as the equitable remedy of

unjust enrichment, for abuse of discretion. See LiButti v. United States, 178 F.3d 114, 121 (2d

Cir. 1999). See generally Beth Israel Med. Ctr. v. Horizon Blue Cross and Blue Shield of N.J.,

Inc., 448 F.3d 573, 586–87 (2d Cir. 2006). The District Court’s determination of whether to

disqualify an attorney is also reviewed for abuse of discretion. See, e.g., Cinema 5, Ltd. v.

Cinerama, Inc., 528 F.2d 1384, 1385, 1387 (2d Cir. 1976); accord Glueck v. Jonathan Logan,

Inc., 653 F.2d 746, 750 (2d Cir. 1981).

B. Legal Malpractice

“In a diversity action based on attorney malpractice, state substantive law, here that of

New York, applies.” Rubens v. Mason, 527 F.3d 252, 254 (2d Cir. 2008). To prevail on a claim

for legal malpractice under New York law, a plaintiff must establish: “(1) attorney negligence;

(2) which is the proximate cause of a loss; and (3) actual damages.” Achtman v. Kirby,

McInerney & Squire, LLP, 464 F.3d 328, 337 (2d Cir. 2006). We limit our discussion to the

dispositive element of actual damages, which was determined by the District Court to be lacking

10
in this case as a matter of law. See Nordwind, 2007 WL 2962350, at *9; see also Achtman, 464

F.3d at 337.

According to the District Court, the German Property Act operates to grant the Nordwind

Parties and Gauger rights to the Kirstein Assets in equal shares. Relying upon this initial

understanding of German law, the District Court reasoned that because Gauger had always been

entitled to 50% of the Kirstein Assets, whatever malpractice that attended Rowland’s dual

representation of the Nordwind Parties and Gauger had no effect, i.e., caused no actual injury, on

the Nordwind Parties’ right to the other 50% of the Kirstein Assets. We agree with the District

Court’s interpretation of German law and, accordingly, the court’s reasons for finding that the
Nordwind Parties suffered no actual injury in this case.

The German Property Act grants restitution rights to owners or their “legal successors”

for property illegally confiscated by the Nazi government. See Vermögensgesetz [VermG]

[Settlement of Pending Property Claims], Sept. 29, 1990, Bundesgesetzblatt, Teil I [BGBl.I] 205,

§ 2(1) (F.R.G) (translated). The right to restitution under the German Property Act vests directly

in the property owner on September 29, 1990 — the date of the enactment of the German

Property Act. In the event the owner has died prior to September 29, 1990, the restitution right

directly vests in the owner’s “legal successors.” 7 Beck’s Brief Commentaries, Palandt

Bürgerliches Gesetzbuch § 1922 (65th rev. ed. 2006) (“If the party originally affected [by the

illegal confiscation] is no longer alive on the key date, i.e., September 29, 1990, his legal

successor shall be the rightful claimant within the meaning of the [German Property Act].”

(translated)). This is because the illegal confiscation measures, which the German Property Act

addresses, were effective in rem, and, therefore, “in cases of death [of the owner of the

confiscated property] before the enactment of the property law, the confiscated asset was neither

part of the estate under testate nor intestate succession.” Bundesverwaltungsgericht [BVerwG]

[Federal Administrative Court] Sept. 7, 1998, BVerwG 1999 VIZ, 215, 217, 8 B 118.98 (Berlin)

(the “English Will Case”).

11
 With respect to the determination of “legal successor,” German law generally provides

that “legal succession by inheritance is governed by the law of the state of which the testator has

been a national at the time of his death.” 7 Beck’s Brief Commentaries, Palandt Bürgerliches

Gesetzbuch EG 25 (65th rev. ed. 2006) (translated). In the context of the German Property Act,

however, German law dictates the determination of “legal successor” without the usual deference

to local succession laws. See English Will Case, BVerwG 8 B 118.98 (“[T]he concept of legal

succession under [the German Property Act] cannot be contingent on the question to whom the

pertinent law of succession allocates the confiscated asset or the restitution claim . . . . [the

determination of ‘legal successor’ is] removed from the realm of law of succession.”). Because
the purpose of the German Property Act is to compensate “for the illegal situation created by the

expropriation and to the extent possible restore the status quo ante,” the term “legal successor”

has been defined specifically as those persons who ultimately would have inherited the property

had it not been illegally confiscated. Id. (“[A]ccording to the meaning and purpose of § 2 [of the

German Property Act,] the person of the legal successor has to be determined without regard to

the confiscation measure subject to the compensation.”). To this end, German law refers to the

“universal heir” or its equivalent, see Bürgerliches Gesetzbuch [BGB] [Civil Code], § 1922(1)

(defining “[u]niversal succession” as the passing of the decedent’s assets “as a whole to one or

several other persons”), as the “legal successor” who would have hypothetically inherited the

illegally confiscated property, see, e.g. English Will Case, BVerwG 8 B 118.98. Since the

beneficiaries named in the residuary clause of a New York will inherit everything in the estate

that is not subject to a specific bequest, these beneficiaries are regarded as the “universal heirs”

for purposes of German law. Cf. id.

The German Civil Code adds an additional layer of analysis to the definition of “legal

successor” by specifying that “[o]nly a person who is living at the time of the accrual of the

12
inheritance may become an heir.”5 The German Civil Code § 1923(1), at 349 (Simon L. Goren,

trans., Fred B. Rothman & Co. 1994). This provision is consistent with the German Property

Act, which, as explained above, (1) requires that the restitution rights vest directly in the property

owner if he or she were not deceased prior to the enactment of the German Property Act, or (2)

requires that the restitution rights vest directly in the property owner’s legal successors if the

property owner had been deceased prior to the enactment of the German Property Act. See

Bundesverwaltungsgericht [BVerwG] [Federal Administrative Court] Aug. 29, 1996, BVerwG

1996 VIZ, 710–711, 7 C 43/95 (VG Leipzig) (the “Farmer Case”). Implied in this formula is that

“legal successors” must be alive at the time the restitution rights vest. Because the German
Property Act requires the identification of those in whom the restitution rights will initially vest,

the requirement that the “legal successor” be alive is a reasonable one that is consistent with the

German Civil Code. Indeed, although the Nordwind Parties misread section 1923(1) of the

German Civil Code, see supra note 5, they do not contest its applicability to the German Property

Act. See, e.g., Expert Opinion of Dr. Stephen Scherer, submitted by the Nordwind Parties

(relying on section 1923(1) of the German Civil Code).

In sum, then, “legal successors” under the German Property Act are those (1) who were

alive at the time of enactment of the German Property Act on September 29, 1990, and (2) who

hypothetically would have inherited the illegally confiscated property by virtue of having

inherited all assets which were not specifically bequeathed from the relevant estate(s). Accord

Farmer Case, BVerwG 1996 7 C 43/95 (“The ‘legal succession’ concept as cited in the [German

Property Act] addresses events of succession that have arisen until the [German Property Act]

came into force on September 29, 1990 . . . . The law thus allows for the circumstance that the

asset, had it not been confiscated from the injured party . . . would have been transferred to the

5
The Nordwind Parties contend that section 1923(1) of the German Civil Code actually
means that “[o]nly persons living at the time of the decedent’s death may become heirs.” The
plain text of the German Civil Code provides, however, that it is “at the time of the accrual of the
inheritance” — and not at the time of the property owner’s death — that determines the relevant
heirs. See id. (emphasis added).

13
intestate or testate heir.” (emphasis added)).

Applying this framework, we conclude that the District Court properly identified Gauger

as the putative 50% owner of the Kirstein Assets. Gauger, who was alive as of September 29,

1990, would have inherited 50% of the Kirstein Assets from Godfrey Jacobsen, who died in 1980

and named Gauger as the residual beneficiary of his estate. Godfrey Jacobsen would have

inherited 50% of the Kirstein Assets from his father, Erich Jacobsen, who died in 1977 and

named Godfrey Jacobsen as the residual beneficiary of his estate. Erich Jacobsen would have

inherited 50% of the Kirstein Assets from his wife, Gabrielle, who died in 1957 and left her

entire estate to Erich Jacobsen. Gabrielle, in turn, would have inherited 50% of the Kirstein
Assets from her mother, Clara Kirstein, who died in 1939 and left the Kirstein Assets to

Gabrielle and Marianna in equal shares.

Similarly, we conclude that the District Court properly identified the Nordwind Parties as

the putative owner of the remaining 50% of the Kirstein Assets. The Nordwind Parties were

assigned 50% of the Kirstein Assets from Miriam Baer and the Oriental Institute. Miriam Baer,

who was alive as of September 29, 1990, would have inherited 50% of the Kirstein Assets from

Klaus Baer, who died in 1987 and left his entire estate to his wife Miriam Baer for her lifetime

with the remainder to the Oriental Institute. Klaus Baer would have inherited 50% of the

Kirstein Assets from his mother Marianna, who died in 1986 and left her entire estate to Klaus

Baer. Marianna, in turn, would have inherited 50% of the Kirstein Assets from her mother, Clara

Kirstein, who died in 1939 and left the Kirstein Assets to Gabrielle and Marianna in equal shares.

We note that the arguments made by the Nordwind Parties are refuted by our

interpretation of German law. For instance, the Nordwind Parties’ contentions that Clara

Kirstein’s so-called “direct” heirs, i.e., her daughters Marianna and Gabrielle, are the legal

successors of Clara Kirstein under the German Property Act and that the restitution rights directly

vested in Marianna’s and Gabrielle’s respective estates on September 29, 1990, is contrary to

German law that limits heirs to living persons at the time of the accrual of the inheritance.

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Because the confiscation of Kirstein Assets had in rem effect, Clara Kirstein could not bequeath

— and her daughters could not inherit — the restitution rights to the confiscated property until

September 29, 1990, when those rights were created by the German Property Act. By the time

the German Property Act was enacted, of course, Marianna and Gabrielle had long since passed

away.

The Nordwind Parties also argue that Gauger could not have inherited the Kirstein Assets

under New York law because “property not owned by the testator at the time of his death is not

subject to disposition by will.” Shaw Family Archives Ltd. v. CMG Worldwide, Inc., 486 F.

Supp. 2d 309, 315 (S.D.N.Y. 2007). Relying upon this New York rule, the Nordwind Parties
assert that Gauger could not have inherited Gabrielle’s 50% interest in the Kirstein Assets by will

because such interest did not exist until September 29, 1990, after all persons preceding Gauger’s

chain of inheritance had already died. This reliance on New York law is misplaced, however, as

New York law — although it may supplement the finding of “legal successor” insofar as New

York wills are involved — does not affect the analysis in identifying the “legal successor” under

German law. Indeed, the Nordwind Parties’ assertion that local succession laws determine the

identity of the “legal successor” is inconsistent with the German Administrative Court’s decision

in the English Will Case. In the English Will Case, the decedent died in England fifteen years

prior to the enactment of the German Property Act. Although English law, like New York law,

did not permit a decedent to bequeath property that did not exist at the time of his death, the

German Administrative Court held that the testamentary heir — and not the intestate heir — was

the “legal successor” to the restitution rights pursuant to the German Property Act. See English

Will Case, BVerwG 8 B 118.98. Thus, whether Gauger would in fact have inherited the property

under New York State’s law of intestate succession is irrelevant in determining the identity of the

“legal successor” under the German Property Act.

Accordingly, because Gauger and the Nordwind Parties are both entitled to 50% of the

restitution rights to the Kirstein Assets, we hold that the Nordwind Parties are unable to establish,

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as a matter of law, that they suffered any injury when they and Gauger each received 50% of the

Kirstein Assets through Rowland’s dual representation.

C. Breach of Fiduciary Duty

The Nordwind Parties also argue that the District Court erred in dismissing their breach

of fiduciary duty claim as duplicative of their legal malpractice claim. We disagree because we

conclude, as did the District Court, that the breach of fiduciary duty claim that plaintiffs

combined in the first cause of action with their legal malpractice claim must be dismissed as

duplicative of the malpractice claim.

Under New York law, where a claim for breach of fiduciary duty is “premised on the
same facts and seeking the identical relief” as a claim for legal malpractice, the claim for

fiduciary duty “is redundant and should be dismissed.” Weil, Gotshal & Manges, LLP v. Fashion

Boutique of Short Hills, Inc., 780 N.Y.S.2d 593, 596 (App. Div. 2004). However, if the remedy

sought by the plaintiffs “is a restitutionary one to prevent the fiduciary’s unjust enrichment,” the

“less stringent ‘substantial factor’ standard” would apply to the causation element of the claim

for breach of fiduciary duty. See LNC Invs., Inc. v. First Fidelity Bank, N.A. N.J., 173 F.3d 454,

465 (2d Cir. 1999) (Sotomayor, J.); see also, e.g., RSL Commc’ns PLC v. Bildirici, — F. Supp.

2d —, 2009 WL 2524614, at 23 n.15 (S.D.N.Y. 2009). Otherwise, “where damages are sought

for breach of fiduciary duty under New York law, the plaintiff must demonstrate that the

defendant’s conduct proximately caused injury in order to establish liability.” LNC Invs., Inc.,

173 F.3d at 465; cf. Achtman, 464 F.3d at 337 (requiring proximate-causation standard to

establish legal malpractice claim).

Here, combined in their first cause of action, the Nordwind Parties do not dispute that

their claims for legal malpractice and breach of fiduciary duty seek identical relief for damages.

Instead, the Nordwind Parties initially argue that their legal malpractice and breach of fiduciary

duty claims are not redundant because those claims are premised on different facts. They assert

that their legal malpractice claim is based on Rowland’s rendering erroneous legal advice to them

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— i.e., that the Nordwind Parties and Gauger were both entitled to 50% of the Kirstein Assets —

before his meeting with Gauger. By contrast, they assert that their claim of breach of fiduciary

duty is based on Rowland’s dual representation of adverse interests — i.e., those alleged

competing interests held by the Nordwind Parties and Gauger — an event that occurred after

Rowland’s meeting with Gauger. We find these distinctions to be trivial. The Nordwind Parties’

legal malpractice and breach of fiduciary duty claims are factually inseparable in this case.

To establish an actionable claim for legal malpractice, the Nordwind Parties argue that (1)

Rowland erroneously interpreted the law and committed malpractice by advising the Nordwind

Parties that Gauger was entitled to 50% of the Kirstein Assets; (2) Rowland acted on his
erroneous interpretation of the law by representing Gauger; and (3) Rowland’s representation of

Gauger caused actual injury, i.e., the Nordwind Parties were identified as only 50% — rather

than 100% — putative owners of the Kirstein Assets. To establish an actionable claim for breach

of fiduciary duty, the Nordwind Parties argue that (1) Rowland’s representation of Gauger (2)

caused Rowland to be less faithful in protecting (3) the Nordwind Parties’ rights to the entirety of

the Kirstein Assets. Presumed in the breach of fiduciary duty claim is that Rowland’s

understanding of the law — that the Nordwind Parties and Gauger each held non-competing

interests to 50% of the Kirstein Assets — was erroneous; otherwise, there would be no viable

breach of fiduciary duty claim in this case had Rowland not represented adverse interests and

failed in his obligation of “undivided loyalty.” See, e.g., Fashion Boutique of Short Hills, Inc.,

780 N.Y.S.2d at 594–96.

It is evident that the Nordwind Parties’ malpractice and breach of fiduciary duty claims

arise from the same three successive factual events: (1) Rowland’s communication of legal

advice regarding the identity of heirs to the Kirstein Assets; (2) Rowland’s dual representation of

the Nordwind Parties and Gauger; and (3) the distribution of awards to the Nordwind Parties and

Gauger in equal shares. The Nordwind Parties’ temporal distinctions merely amount to

identifying one of these factual events as different from another. Their argument fails because all

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three of these factual events are at the core of both the malpractice and breach of fiduciary duty

claims.

The Nordwind Parties next argue that their legal malpractice and breach of fiduciary duty

claims are not redundant because different standards of causation apply to the two claims.

Although the Nordwind Parties’ erroneously argue that a legal malpractice and breach of

fiduciary duty claim can never be redundant, they are correct in recognizing that New York law

applies the lower “substantial factor” standard of causation to a breach of fiduciary duty claim for

which the remedy of restitution is sought. The District Court, in rejecting plaintiffs’ argument,

reasoned that New York law does not differentiate between the causation standards for legal
malpractice and breach of fiduciary duty in the context of attorney liability. Although the

reasoning by which the District Court rejected plaintiffs’ argument was incorrect, see LNC Invs.,

173 F.3d at 465, we, too, reject that argument. The Nordwind Parties sought damages, and not

restitution, as a remedy for the breach of fiduciary duty claim they stated as part of their first

cause of action. Therefore, the District Court did not err in dismissing that claim for redundancy.

The Nordwind Parties also brought, as part of their second cause of action, an “unjust

enrichment” claim that is, in some respects, duplicative of the breach of fiduciary duty claim that

they brought as part of their first cause of action. However, for this unjust enrichment claim the

Nordwind Parties sought a restitutionary remedy rather than damages. The District Court did not

dismiss the Nordwind Parties’ unjust enrichment claim as redundant but instead denied relief

after considering the claim on the merits. See infra Part II(D) (“Unjust Enrichment”).

D. Unjust Enrichment

The Nordwind Parties challenge the District Court’s denial of their claim for unjust

enrichment, for which they also seek the remedy of restitution. Specifically, the Nordwind

Parties argue that all compensation paid to Rowland during his period of disloyalty to them

“must [be] disgorge[d] . . ., irrespective of proof of damages.” Having concluded as a matter of

law that the Nordwind Parties received the entire amount of their share of the Kirstein Assets to

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which they were entitled, i.e., 50%, we necessarily conclude that the breach of fiduciary duty

claim that the Nordwind Parties included within their unjust enrichment claim fails because they

were unable to show that they were injured by any alleged breach of fiduciary duty. Further, we

hold that the District Court did not abuse its discretion in denying relief on the remainder of the

Nordwind Parties’ unjust enrichment claim.

Under New York law, a plaintiff may prevail on a claim for unjust enrichment by

demonstrating “(1) that the defendant benefitted; (2) at the plaintiff’s expense; and (3) that equity

and good conscience require restitution.” Beth Israel Med. Ctr., 448 F.3d at 586 (internal

quotation marks omitted). The main thrust of the Nordwind Parties’ argument is that equity
compels an award of restitution because Rowland used information he received from

representing the Nordwind Parties to advocate the interests of a party who holds competing

interests. The Nordwind Parties’ argument, however, cannot stand because it relies upon the

false premise that Gauger held “competing interests” with the Nordwind Parties regarding the

Kirstein Assets. As explained above, the Nordwind Parties are entitled to 50% of the Kirstein

Assets — no more and no less. We conclude the District Court did not err in deciding, for

purposes of ruling on the Nordwind Parties unjust enrichment claim, that Rowland’s use of

information to recover Gauger’s 50% interest in the Kirstein Assets could not have come at the

Nordwind Parties’ expense. Neither equity nor good conscience would require restitution where,

as here, the plaintiffs did not hold a competing interest in Gauger’s 50% share of the Kirstein

Assets and secured exactly what they were legally entitled to receive.

E. Disqualification

Finally, the Nordwind Parties challenge the District Court’s denial of their request to

disqualify Rowland “from continuing to represent Gauger’s competing interest in the

unrecovered portion of the [Kirstein] Assets.” The Nordwind Parties argue that Rowland had

become privy to privileged information in the course of his representation of them and that the

privileged information is directly relevant to the interests implicated in Rowland’s representation

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of Gauger. In light of our holding on the legal question of Gauger’s entitlement to 50% of the

Kirstein Assets, we conclude that the District Court did not abuse its discretion in having decided

against disqualifying Rowland from further representation.

In determining whether to disqualify an attorney from representing a client, a court

necessarily balances the client’s right to select counsel of his choice against the need to maintain

the integrity and high standards of the legal profession. See Glueck v. Jonathan Logan, Inc., 653

F.2d 746, 748 (2d Cir. 1981). To this end, “our decisions on disqualification motions often

benefit from guidance offered by the American Bar Association (ABA) and state disciplinary

rules,” although not every violation of a disciplinary rule will require disqualification.
Hempstead Video, Inc. v. Incorporated Vill. of Valley Stream, 409 F.3d 127, 132 (2d Cir. 2005).

In the context of successive representation, where disqualification is asserted by a former client

to prohibit an attorney from representing another client, we have stated that disqualification may

be warranted if:

(1) the moving party is a former client of the adverse party’s counsel;

(2) there is a substantial relationship between the subject matter of the counsel’s
prior representation of the moving party and the issues in the present lawsuit; and

(3) the attorney whose disqualification is sought had access to, or was likely to
have had access to, relevant privileged information in the course of his prior
representation of the client.

Id. at 133.

With respect to whether Rowland had access to, or was likely to have access to, relevant

privileged information, the Nordwind Parties fail to make any argument on this point. They

merely assert in conclusory fashion that “Rowland had direct access to relevant, privileged

information” without identifying any error with the District Court’s findings that the relevant

information “has become generally known” and that the “allegedly ‘confidential’ information did

not relate to the Nordwind Parties but to Ms. Gauger.” Nordwind, 2007 WL 2962350, at *9.

More importantly, however, the Nordwind Parties fail to demonstrate that Rowland’s

representation of Gauger was adverse to the Nordwind Parties’ interests. Because Gauger was

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entitled to 50% of the Kirstein Assets, any representation on behalf of her rightful portion of the

Kirstein Assets is not adverse to the Nordwind Parties’ interests in the other 50% of the Kirstein

Assets. That is, the Nordwind Parties’ right to 50% of the Kirstein Assets and Gauger’s right to

50% of the Kirstein Assets represent separate stakes that can wholly co-exist without

undermining any part of each other. See Smith v. City of N.Y., 611 F. Supp. 1080, 1088

(S.D.N.Y. 1985) (“Ethical problems arise only when differing interests adversely affect counsel’s

judgment or dilute his loyalty.”).

Accordingly, we conclude that the District Court did not abuse its discretion in denying

the Nordwind Parties’ request to have Rowland disqualified from continuing to represent Gauger
in proceedings relating to the Kirstein Assets.

III. CONCLUSION
For the foregoing reasons, the judgment of the District Court is AFFIRMED. The

pending motion to enjoin Rowland from directly or indirectly assisting Gauger’s estate or her

heirs is DISMISSED as moot.

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