Concord Servicing Corporation v. JPMorgan Chase Bank NA et al

Filing 38

ORDER granting 28 Whitney's Motion to Dismiss; party Whitney National Bank terminated. Signed by Judge James A Teilborg on 7/16/12.(LSP)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,
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vs.
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JPMorgan Chase Bank, N.A.; Whitney)
National Bank; Standard Chartered Bank,)
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Defendants.
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Concord Servicing Corporation,

No. CV 12-0438-PHX-JAT
ORDER

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Pending before the Court is Defendant Whitney National Bank’s (“Whitney”) Motion
to Dismiss. (Doc. 28). The Court now rules on the Motion.

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I.

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Plaintiff is an Arizona corporation. (Doc. 1-1 at 2). Whitney is a regional banking

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institution based in Louisiana. (Doc. 24 at 2). Plaintiff alleges that between 2009 and 2011,

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Victor Aguilar fraudulently indorsed 221 checks (“Checks”) that had been intended for the

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customers of Plaintiff’s clients. (Doc. 1-1 at 3-6). Plaintiff further alleges that Whitney

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accepted some portion of the Checks for processing. Id. at 6. Plaintiff argues that accepting

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the Checks for processing, and presenting them to Defendant JPMorgan Chase Bank for

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payment, was negligent. Id. at 9.

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BACKGROUND

Whitney now moves to dismiss Plaintiff’s claim against it, arguing that this Court
lacks personal jurisdiction over Whitney. (Doc. 28 at 1-2).

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II.

LEGAL STANDARD
A.

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BURDEN OF PROOF

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When a defendant moves prior to trial to dismiss a complaint for lack of personal

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jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), the district court

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determines the method of resolving the jurisdictional issue. Data Disc, Inc. v. Sys. Tech.

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Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977). If the parties have submitted only written

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materials, the plaintiff “must make only a prima facie showing of jurisdictional facts through

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the submitted materials in order to avoid a defendant’s motion to dismiss.” Id.
B.

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PERSONAL JURISDICTION

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In the absence of a federal statute governing the existence of personal jurisdiction, a

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federal court applies the personal jurisdiction law of the state in which the court sits.

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Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004); Terracom v.

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Valley Nat’l Bank, 49 F.3d 555, 559 (9th Cir. 1995). Arizona’s long-arm statute provides that

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an Arizona court may exercise personal jurisdiction over a nonresident defendant to the

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maximum extent permitted under the Due Process Clause of the United States Constitution.

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Ariz. R. Civ. P. 4.2(a); Uberti v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995).

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The Due Process Clause requires that a nonresident defendant have certain minimum

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contacts with the forum state such that the exercise of personal jurisdiction “does not offend

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traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326

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U.S. 310, 316 (1945) (internal quotation omitted). Due process protects a defendant’s “liberty

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interest in not being subject to the binding judgments of a forum with which he has

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established no meaningful contacts, ties, or relations.” Omeluk v. Langsten Slip &

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Batbyggeri, 52 F.3d 267, 270-71 (9th Cir. 1995) (quoting Burger King Corp. v. Rudzewicz,

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471 U.S. 462, 471-72 (1985)).1

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Personal jurisdiction may be either general or specific. See Helicopteros Nacionales

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A defendant may also choose to waive his due process rights and consent to personal
jurisdiction. See Burger King, 471 U.S. at 472 n.14.
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de Columbia v. Hall, 466 U.S. 408, 414-15 nn.8-9 (1984) (citations omitted). General

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jurisdiction exists when a defendant has “continuous and systematic” contacts with the forum

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state. Id. at 415 (quoting Perkins v. Benquet Consol. Mining Co., 342 U.S. 437, 445 (1952));

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see also Data Disc, 577 F.2d at 1287. A state may exercise specific jurisdiction over a

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defendant lacking continuous and systematic contacts if the controversy is related to or arises

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out of the defendant’s contacts with a forum state. See Helicopteros Nacionales, 466 U.S. at

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414 (internal quotation omitted). In evaluating whether an exercise of specific jurisdiction

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is proper, courts focus on the “relationship among the defendant, the forum, and the

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litigation.” Id. (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). The inquiry evaluates

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the “nature and quality of the defendant’s contacts in relation to the cause of action.” Data

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Disc, 577 F.2d at 1287.

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The Ninth Circuit applies a three-prong test to determine whether a defendant’s

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contacts with the forum state are sufficient enough that an exercise of personal jurisdiction

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comports with due process. See Schwarzenegger, 374 F.3d at 802.

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(1) The non-resident defendant must purposefully direct his activities or
consummate some transaction with the forum or resident thereof; or perform
some act by which he purposefully avails himself of the privilege of
conducting activities in the forum, thereby invoking the benefits and
protections of its laws; (2) the claim must be one which arises out of or relates
to the defendant’s forum-related activities; and (3) the exercise of jurisdiction
must comport with fair play and substantial justice, i.e. it must be reasonable.

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Id. (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)); see also Bancroft & Masters,

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Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). The plaintiff bears the burden

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of satisfying the first two prongs of this test, Schwarzenegger, 374 F.3d at 802, and is

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“obligated to come forward with facts, by affidavit or otherwise, supporting personal

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jurisdiction.” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986) (quoting Amba Mktg. Sys.,

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Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). Once the plaintiff has made this

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showing, “the burden then shifts to the defendant to ‘present a compelling case’ that the

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exercise of jurisdiction would not be reasonable.” Schwarzenegger, 374 F.3d at 802 (citing

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Burger King, 471 U.S. at 476-78).

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The first prong of the three-part specific jurisdiction test requires the plaintiff to
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establish either that the defendant purposefully availed himself of the privilege of conducting

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activities within the forum state or that he purposefully directed his activities toward the

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forum state. Id. Availment and direction are distinct concepts, with availment being the

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standard for suits based in contract and direction the standard for suits based in tort. Id. Here,

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Plaintiff’s claim against Whitney is for negligence, so the Court will apply the purposeful

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direction standard.

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The second prong of the Ninth Circuit’s test for specific jurisdiction, whether the

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claim arises out of or relates to the defendant’s forum-related activities, is a “but for” test.

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Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001); see also Ballard v. Savage, 65 F.3d

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1495, 1500 (9th Cir. 1995). The claim arises out of the defendant’s forum-related activities

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if, but for the contacts between the defendant and the forum state, the cause of action would

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not have arisen. Id. at 924.

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Once a plaintiff has shown that the first two prongs of the test are satisfied, a court

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presumes that the exercise of personal jurisdiction is reasonable. Ballard, 65 F.3d at 1500

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(citing Sher v. Johnson, 911 F.2d 1357, 1364 (9th Cir. 1990)). The burden then shifts to the

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defendant to show a compelling case that the exercise of jurisdiction would be unreasonable.

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Id.; Schwarzenegger, 374 F.3d at 802 (citing Burger King, 471 U.S. at 476-78).

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III.

DISCUSSION
A.

SPECIFIC JURISDICTION

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Plaintiff asserts that Whitney’s actions in processing the Checks give this Court

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specific jurisdiction over Whitney. Applying the first part of the Ninth Circuit test for

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specific jurisdiction, Plaintiff does not meet its burden of demonstrating that Whitney

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purposely directed its actions toward Arizona. The three-part Calder effects test, taken from

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the Supreme Court’s decision in Calder v. Jones, 465 U.S. 783 (1984), is used to evaluate

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purposeful direction. Under this test, “the defendant allegedly must have (1) committed an

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intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant

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knows is likely to be suffered in the forum state.” Yahoo! Inc. v. La Ligue Contre Le

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Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006).
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To satisfy the first requirement of the effects test, it is enough that a defendant

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performed “an actual, physical act in the real world.” Schwarzenegger, 374 F.3d at 806. The

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defendant need not have intended “to accomplish a result or consequence of that act.” Id.

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Here, Whitney’s acceptance and presentment of the Checks to Defendant Chase constitutes

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an intentional act. Thus, the first prong of the Calder test is satisfied.

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“The second part of the Calder-effects test requires that the defendant’s conduct be

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expressly aimed at the forum.” Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d

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1124, 1129 (9th Cir. 2010). As a general principle, express aiming requires more than

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“‘untargeted negligence’ that merely happened to cause harm to [a plaintiff].”

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Schwarzenegger, 374 F.3d at 807 (quoting Calder, 465 U.S. at 789). The “requirement is

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satisfied ‘when the defendant is alleged to have engaged in wrongful conduct targeted at a

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plaintiff whom the defendant knows to be a resident of the forum state.’” Menken v. Emm,

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503 F.3d 1050, 1059 (9th Cir. 2007) (quoting Dole Food Co., Inc. v. Watts, 303 F.3d 1104,

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1111 (9th Cir. 2002)); see also Bancroft, 223 F.3d at 1087 (concluding that “‘express aiming’

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encompasses wrongful conduct individually targeting a known forum resident”).

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Here, Plaintiff fails to show that Whitney’s alleged wrongdoing was expressly aimed

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at Plaintiff. Whitney’s alleged negligence arose in the normal course of banking. (Doc. 28

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at 4). Plaintiff does not allege that Whitney’s allegedly wrongful conduct individually

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targeted Plaintiff or that Whitney was even aware that Plaintiff was an Arizona resident when

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it processed the Checks. Moreover, Courts generally have rejected the idea that a nonresident

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bank’s processing of a check connected to the forum state gives rise to specific jurisdiction.

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See Resolution Trust Corp. v. First of Am. Bank, 796 F. Supp. 1333, 1337 n.3 (C.D. Cal.

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1992) (collecting cases). Plaintiff thus has failed to make a prima facie showing of purposeful

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direction, the first prong of the three-part test for specific personal jurisdiction. This Court

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therefore need not proceed to the remaining two prongs. Plaintiff has not shown that

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Defendants have sufficient minimum contacts with Arizona such that this Court’s exercise

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of specific personal jurisdiction would comport with Defendants’ due process rights.

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B.

GENERAL JURISDICTION

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Plaintiff also asserts that this Court may have general jurisdiction over Whitney.

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Plaintiff argues that it be allowed to conduct jurisdictional discovery in order to show that

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Whitney has continuous and systematic contacts with Arizona in the form of depositors or

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borrowers. The Third Circuit Court of Appeals, as Plaintiff argues, has confirmed general

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jurisdiction over an out-of-state bank based partly on the presence of depositors and

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outstanding loans within the forum state. See Provident Nat’l Bank v. California Fed. Sav.

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& Loan, 819 F.2d 434 (3d Cir. 1987) (cited in Ballard, 65 F.3d at 1499). There, however, the

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out-of-state bank maintained a zero balance account with a bank within the forum. Id. at 438.

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That account involved daily communication and transactions between the banks, and was “a

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continuous and central part of [the out-of-state bank’s] business.” Id.

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Here, Whitney has affirmed that it had no such relationship with an Arizona bank, nor

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any offices or direct operations in Arizona. (Doc. 28-2). Plaintiff merely alleges that a portion

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of Whitney’s activities is traceable to Arizona. Perhaps general jurisdiction would exist if

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that portion were sufficiently large. See Lakin v. Prudential Sec., 348 F.3d 704 (8th Cir.

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2003) (Jurisdictional discovery allowed where a ten million dollar loan portfolio in the state

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implied multi-year lending relationships with “hundreds, if not thousands of [forum]

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residents”). But there is no evidence of any business between Whitney and Arizona. Plaintiff

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essentially requests the Court allow it to conduct a fishing expedition in the hope of

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discovering some fact upon which general jurisdiction might be based. Without some

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foundation for this request, the Court will not grant it. See Terracom, 49 F.3d at 562 (“Where

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a plaintiff’s claim of personal jurisdiction appears to be both attenuated and based on bare

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allegations in the face of specific denials made by defendants, the Court need not permit even

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limited discovery.”) (quoting Rich v. KIS Cal., Inc., 121 F.R.D. 254, 259 (M.D.N.C. 1988)).

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IV.

CONCLUSION

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The Court thus finds that it has neither specific nor general personal jurisdiction over

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Whitney. The Court also finds that Plaintiff has failed to articulate a sufficient basis for

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allowing jurisdictional discovery.
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Accordingly,

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IT IS ORDERED granting Whitney’s Motion to Dismiss. (Doc. 28).

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DATED this 16th day of July, 2012.

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