WIP Wohnungsbaugesellschaft Prenzlauer Berg mbH v. Sutton

Emil Bendix, who was Jewish, owned an apartment building in Berlin that he sold under duress in 1933. When World War II ended, the property was administered by the German Democratic Republic (GDR). After reunification, Germany enacted a law for the return of properties taken by the GDR. While claims were being processed, government-appointed administrators maintained the properties, paid taxes, and collected rents. Claimants were obligated to reimburse administrators for maintenance and repair expenses. WIP Wohnungsbaugesellschaft Prenzlauer Berg mbH (WIP) (plaintiff) administered Bendix’s property. Bendix’s daughter Sutton (defendant) filed a claim and recovered the property. WIP sued Sutton in Berlin seeking reimbursement for roofing work, window installation, and an antenna system. WIP’s claims were rejected but reinstated on appeal. Sutton was ordered to reimburse WIP for roof and window repairs and most of the litigation costs, totaling nearly US$385,000. WIP moved in New York (N.Y.) state court for a judgment based on the German judgments. Sutton argued that the German judgments should not be recognized because the claim on which they were based was repugnant to N.Y.’s stated public policy; they were an unconstitutional taking of property without just compensation; and by ignoring WIP’s waiver of its contractual reimbursement right when transferring the property, they conflicted with the U.S. Constitution’s Contracts Clause. WIP maintained that property was not taken from Sutton but was recovered by Sutton, the transfer of property was pursuant to statute and not a contract, and Sutton should not benefit from the property-recovery part of the law and ignore the part that required expense reimbursement.