More than nine years ago, “Legal Files” (December 2008, p. 26) reported about the seizure of a 1957 Ferrari 250 GT Pinin Farina Series I cabriolet, chassis 0799GT, from the Sharon, CT, home of noted collector Barney Hallingby.
Hallingby got the car back after about a year, but the litigation over its ownership has just ended — or has it? With the assistance of Hallingby and his lead counsel, Denver’s Lawrence Treece, we are now able to tell the full story.
The cast of characters
In 1991, Dr. Andreas Gerber and Bernhard Friedli, both Swiss citizens, owned 0799 in partnership. The facts are pretty murky, but Friedli entered into one — and possibly two — transactions for the sale of 0799 and several other cars with a Guiseppe Guidice. As part of their dealings, the Ferrari was shipped from Switzerland to Marbella, Spain, where it came into the custody of a dealer named Motorauto Marbella.
The Spanish litigation
The deal apparently went awry in some way, and Friedli lost track of Guidice and the Ferrari. When he discovered that Motorauto had the car, Friedli filed criminal proceedings in Marbella alleging that the car had been stolen. The Spanish police impounded the Ferrari.
The Spanish court dismissed the criminal case, ruling that there was insufficient evidence that a theft had occurred and that this was a civil dispute regarding who owed whom how much money.
The court ordered Motorauto to hold 0799 for 90 days to allow Friedli to file a civil suit seeking its return. Friedli did so, but he did not serve Motorauto within the 90 days. Unaware of the filing, Motorauto sold the Ferrari to a business associate to whom it owed money. The Ferrari was resold, transported to Portugal and eventually ended up in the United States, where Hallingby bought the car in 2000.
Friedli tried to get the court to hold Motorauto in contempt, but the court found them innocent because Friedli failed to serve or even notify them within the allotted time. The civil case was decided in favor of Motorauto, with the court determining there was insufficient evidence of any contract between Friedli and anyone.
All in all, there were four final judgments in Spain, all of them adverse to Friedli.
A “stolen” car
Although Gerber was not involved in any of the Spanish lawsuits, he insisted that “his” Ferrari had been stolen. However, he has never started any litigation to recover the Ferrari. Instead, he has conducted what Hallingby refers to as a “guerrilla war” of public statements claiming ownership of the “stolen” Ferrari.
In 2008, Gerber became aware that Hallingby was in the midst of selling 0799 to a German purchaser. Gerber’s Swiss attorney, Weber, placed ads in Cavallino andFerrari Market Letter “alerting” the Ferrari community that 0799 had been stolen in 1993, it was in Connecticut, and the police were on the trail.
Weber also reported the Ferrari stolen to Connecticut police and requested its seizure. Weber also threatened the prospective buyer with criminal prosecution if he completed the purchase. The publicity and threats were enough to kill Hallingby’s sale.
A year later, the Connecticut State Attorney declined to prosecute Hallingby, and the Ferrari was returned to him. Still, no lawsuit came from Gerber. The same pattern was repeated in 2013, killing another sale.
Litigation starts
With no other alternative to litigation, Hallingby filed suit in U.S. District Court in Connecticut against Gerber and Friedli’s heirs (Friedli died in 1996), asking the court to declare him the rightful owner of 0799 and to hold Gerber liable for interference with the sale of the Ferrari.
Gerber responded with Weber filing a memorandum supporting dismissal of the case. The court rejected the memorandum because Weber is not licensed to practice in the U.S. Gerber then filed the same document under his own name. As the litigation started gaining steam, Gerber decided to quit, telling the court he would no longer participate in the case and withdrew all his filings.
Hallingby ended up with default judgments against Gerber and the Friedli heirs. The judgments determined that Hallingby was the rightful owner of the Ferrari, and ordered Gerber to stop claiming the opposite. Hallingby was vindicated — or so it seemed.
No end to conflict
Apparently, Gerber just won’t take no for an answer. He has continued his “guerrilla war” with Internet and social-media postings claiming he is the rightful owner of 0799, that he will never give up his claim, that the Spanish judgments are unenforceable due to “corruption” and that the U.S. judgment is a “farce.” He promises to scuttle any future sale of the Ferrari.
A frustrated Treece expressed the situation well: “You can’t make a guy shut up — especially when he’s in a foreign country.”
As “Legal Files” has pointed out several times, some people think that the combination of the Internet and their free-speech rights allows them to defame anyone at will before a worldwide audience. That is definitely not the legal case, but the courts can’t really take their smartphones away from them.
You can sue them later, but the damage has already been done. Winning a judgment against them won’t necessarily stop them, and damages may be difficult to collect.
Hallingby is left with little alternative but to launch his own PR campaign. He is trying to get the story out, to get the Ferrari world to recognize that Gerber’s claims are meritless and should be ignored.
Who’s the owner?
Who owns 0799? Hallingby has a court judgment that says he does, but does that end the debate? The short answer is “maybe,” depending upon where the question is being asked.
The key legal principle here is jurisdiction — that is, did the U.S. court have jurisdiction over Gerber? At first, the clear answer was no.
For a court to have jurisdiction over a defendant, the person must either be a resident of or have some direct connection with the forum. Hallingby and the Ferrari are both in Connecticut, but Gerber is a Swiss resident who did nothing in Connecticut. For that reason, he was initially not subject to the jurisdiction of the U.S. court, and could have simply ignored the proceedings.
Instead, Gerber appeared in the U.S. court by filing the memorandum that was written by Weber. He may have thereby voluntarily submitted to the court’s jurisdiction. The general rule is that you can appear to establish that the court has no jurisdiction over you without creating jurisdiction, and Gerber made that claim for dismissal.
But, according to Treece, he went beyond that and challenged the merits of the claim. By doing that, he appeared in the lawsuit and became subject to the court’s jurisdiction. Once jurisdiction is established, the defendant can’t walk away and destroy it.
Location matters
If Treece is correct, the U.S. judgment is final, beyond appeal — and clearly establishes that Hallingby owns 0799 and Gerber has no claim to it. That will be law in every state in the U.S. But will another country recognize the validity of the U.S. judgment?
Treece believes that many foreign countries will recognize the judgment, particularly the “common law” countries such as Great Britain, Canada, Australia and New Zealand. However, Treece acknowledges that it may not be respected in all countries.
Gerber can challenge the validity of the judgment anywhere — either by going to Connecticut to do so or in any other country where Hallingby seeks to enforce the judgment. However, his only potential challenge would be on jurisdictional grounds, and that depends entirely on how his appearance is categorized. If he did more than simply challenge U.S. jurisdiction, he can’t prevent enforcement.
Spanish judgments
There are two issues with the Spanish judgments. The first is whether other countries will respect them. Hallingby’s Spanish lawyers have examined the proceedings and judgments and have concluded that they are final and beyond appeal, and that they should be recognized in many other countries — but, again, perhaps not in all countries.
The second issue is that Gerber never appeared in those lawsuits — they were brought by Friedli, who was Gerber’s partner in the Ferrari. Under U.S. law, Gerber would be bound by the result due to the nature of a partnership, but other countries may or may not see it the same way.
Legal and cultural differences
The collector-car market has become a worldwide market. The cars trade back and forth from country to country with relative ease.
Unfortunately, there is no uniform or universal set of laws that applies everywhere. Each country has its own set of laws, some very similar to others — some quite different. Each country has its own cultural identity and norms, and its culture affects how its laws — and those of other countries — are interpreted and applied. It makes a huge difference which country’s law is going to be applied to resolve a dispute, and that choice often depends upon which country the lawsuit is filed in.
The unfortunate reality is that Hallingby, and any future owner of his Ferrari, may have to be careful about which countries the Ferrari is taken into. At least during Gerber’s lifetime. ♦
JOHN DRANEAS is an attorney in Oregon. His comments are general in nature and are not intended to substitute for consultation with an attorney. He can be reached through www.draneaslaw.com.