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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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 15 ) ) ) Plaintiff, ) ) vs. ) ) JPMorgan Chase Bank, N.A.; Whitney) National Bank; Standard Chartered Bank,) ) ) Defendants. ) ) Concord Servicing Corporation, No. CV 12-0438-PHX-JAT ORDER 16 17 18 Pending before the Court is Defendant Whitney National Bank’s (“Whitney”) Motion to Dismiss. (Doc. 28). The Court now rules on the Motion. 19 I. 20 Plaintiff is an Arizona corporation. (Doc. 1-1 at 2). Whitney is a regional banking 21 institution based in Louisiana. (Doc. 24 at 2). Plaintiff alleges that between 2009 and 2011, 22 Victor Aguilar fraudulently indorsed 221 checks (“Checks”) that had been intended for the 23 customers of Plaintiff’s clients. (Doc. 1-1 at 3-6). Plaintiff further alleges that Whitney 24 accepted some portion of the Checks for processing. Id. at 6. Plaintiff argues that accepting 25 the Checks for processing, and presenting them to Defendant JPMorgan Chase Bank for 26 payment, was negligent. Id. at 9. 27 28 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). 1 II. LEGAL STANDARD A. 2 BURDEN OF PROOF 3 When a defendant moves prior to trial to dismiss a complaint for lack of personal 4 jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), the district court 5 determines the method of resolving the jurisdictional issue. Data Disc, Inc. v. Sys. Tech. 6 Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977). If the parties have submitted only written 7 materials, the plaintiff “must make only a prima facie showing of jurisdictional facts through 8 the submitted materials in order to avoid a defendant’s motion to dismiss.” Id. B. 9 PERSONAL JURISDICTION 10 In the absence of a federal statute governing the existence of personal jurisdiction, a 11 federal court applies the personal jurisdiction law of the state in which the court sits. 12 Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004); Terracom v. 13 Valley Nat’l Bank, 49 F.3d 555, 559 (9th Cir. 1995). Arizona’s long-arm statute provides that 14 an Arizona court may exercise personal jurisdiction over a nonresident defendant to the 15 maximum extent permitted under the Due Process Clause of the United States Constitution. 16 Ariz. R. Civ. P. 4.2(a); Uberti v. Leonardo, 892 P.2d 1354, 1358 (Ariz. 1995). 17 The Due Process Clause requires that a nonresident defendant have certain minimum 18 contacts with the forum state such that the exercise of personal jurisdiction “does not offend 19 traditional notions of fair play and substantial justice.” Int’l Shoe Co. v. Washington, 326 20 U.S. 310, 316 (1945) (internal quotation omitted). Due process protects a defendant’s “liberty 21 interest in not being subject to the binding judgments of a forum with which he has 22 established no meaningful contacts, ties, or relations.” Omeluk v. Langsten Slip & 23 Batbyggeri, 52 F.3d 267, 270-71 (9th Cir. 1995) (quoting Burger King Corp. v. Rudzewicz, 24 471 U.S. 462, 471-72 (1985)).1 25 Personal jurisdiction may be either general or specific. See Helicopteros Nacionales 26 27 28 1 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. -2- 1 de Columbia v. Hall, 466 U.S. 408, 414-15 nn.8-9 (1984) (citations omitted). General 2 jurisdiction exists when a defendant has “continuous and systematic” contacts with the forum 3 state. Id. at 415 (quoting Perkins v. Benquet Consol. Mining Co., 342 U.S. 437, 445 (1952)); 4 see also Data Disc, 577 F.2d at 1287. A state may exercise specific jurisdiction over a 5 defendant lacking continuous and systematic contacts if the controversy is related to or arises 6 out of the defendant’s contacts with a forum state. See Helicopteros Nacionales, 466 U.S. at 7 414 (internal quotation omitted). In evaluating whether an exercise of specific jurisdiction 8 is proper, courts focus on the “relationship among the defendant, the forum, and the 9 litigation.” Id. (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). The inquiry evaluates 10 the “nature and quality of the defendant’s contacts in relation to the cause of action.” Data 11 Disc, 577 F.2d at 1287. 12 The Ninth Circuit applies a three-prong test to determine whether a defendant’s 13 contacts with the forum state are sufficient enough that an exercise of personal jurisdiction 14 comports with due process. See Schwarzenegger, 374 F.3d at 802. 15 18 (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. 19 Id. (citing Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)); see also Bancroft & Masters, 20 Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). The plaintiff bears the burden 21 of satisfying the first two prongs of this test, Schwarzenegger, 374 F.3d at 802, and is 22 “obligated to come forward with facts, by affidavit or otherwise, supporting personal 23 jurisdiction.” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir. 1986) (quoting Amba Mktg. Sys., 24 Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)). Once the plaintiff has made this 25 showing, “the burden then shifts to the defendant to ‘present a compelling case’ that the 26 exercise of jurisdiction would not be reasonable.” Schwarzenegger, 374 F.3d at 802 (citing 27 Burger King, 471 U.S. at 476-78). 16 17 28 The first prong of the three-part specific jurisdiction test requires the plaintiff to -3- 1 establish either that the defendant purposefully availed himself of the privilege of conducting 2 activities within the forum state or that he purposefully directed his activities toward the 3 forum state. Id. Availment and direction are distinct concepts, with availment being the 4 standard for suits based in contract and direction the standard for suits based in tort. Id. Here, 5 Plaintiff’s claim against Whitney is for negligence, so the Court will apply the purposeful 6 direction standard. 7 The second prong of the Ninth Circuit’s test for specific jurisdiction, whether the 8 claim arises out of or relates to the defendant’s forum-related activities, is a “but for” test. 9 Doe v. Unocal Corp., 248 F.3d 915, 924 (9th Cir. 2001); see also Ballard v. Savage, 65 F.3d 10 1495, 1500 (9th Cir. 1995). The claim arises out of the defendant’s forum-related activities 11 if, but for the contacts between the defendant and the forum state, the cause of action would 12 not have arisen. Id. at 924. 13 Once a plaintiff has shown that the first two prongs of the test are satisfied, a court 14 presumes that the exercise of personal jurisdiction is reasonable. Ballard, 65 F.3d at 1500 15 (citing Sher v. Johnson, 911 F.2d 1357, 1364 (9th Cir. 1990)). The burden then shifts to the 16 defendant to show a compelling case that the exercise of jurisdiction would be unreasonable. 17 Id.; Schwarzenegger, 374 F.3d at 802 (citing Burger King, 471 U.S. at 476-78). 18 19 III. DISCUSSION A. SPECIFIC JURISDICTION 20 Plaintiff asserts that Whitney’s actions in processing the Checks give this Court 21 specific jurisdiction over Whitney. Applying the first part of the Ninth Circuit test for 22 specific jurisdiction, Plaintiff does not meet its burden of demonstrating that Whitney 23 purposely directed its actions toward Arizona. The three-part Calder effects test, taken from 24 the Supreme Court’s decision in Calder v. Jones, 465 U.S. 783 (1984), is used to evaluate 25 purposeful direction. Under this test, “the defendant allegedly must have (1) committed an 26 intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant 27 knows is likely to be suffered in the forum state.” Yahoo! Inc. v. La Ligue Contre Le 28 Racisme Et L’Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006). -4- 1 To satisfy the first requirement of the effects test, it is enough that a defendant 2 performed “an actual, physical act in the real world.” Schwarzenegger, 374 F.3d at 806. The 3 defendant need not have intended “to accomplish a result or consequence of that act.” Id. 4 Here, Whitney’s acceptance and presentment of the Checks to Defendant Chase constitutes 5 an intentional act. Thus, the first prong of the Calder test is satisfied. 6 “The second part of the Calder-effects test requires that the defendant’s conduct be 7 expressly aimed at the forum.” Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 8 1124, 1129 (9th Cir. 2010). As a general principle, express aiming requires more than 9 “‘untargeted negligence’ that merely happened to cause harm to [a plaintiff].” 10 Schwarzenegger, 374 F.3d at 807 (quoting Calder, 465 U.S. at 789). The “requirement is 11 satisfied ‘when the defendant is alleged to have engaged in wrongful conduct targeted at a 12 plaintiff whom the defendant knows to be a resident of the forum state.’” Menken v. Emm, 13 503 F.3d 1050, 1059 (9th Cir. 2007) (quoting Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 14 1111 (9th Cir. 2002)); see also Bancroft, 223 F.3d at 1087 (concluding that “‘express aiming’ 15 encompasses wrongful conduct individually targeting a known forum resident”). 16 Here, Plaintiff fails to show that Whitney’s alleged wrongdoing was expressly aimed 17 at Plaintiff. Whitney’s alleged negligence arose in the normal course of banking. (Doc. 28 18 at 4). Plaintiff does not allege that Whitney’s allegedly wrongful conduct individually 19 targeted Plaintiff or that Whitney was even aware that Plaintiff was an Arizona resident when 20 it processed the Checks. Moreover, Courts generally have rejected the idea that a nonresident 21 bank’s processing of a check connected to the forum state gives rise to specific jurisdiction. 22 See Resolution Trust Corp. v. First of Am. Bank, 796 F. Supp. 1333, 1337 n.3 (C.D. Cal. 23 1992) (collecting cases). Plaintiff thus has failed to make a prima facie showing of purposeful 24 direction, the first prong of the three-part test for specific personal jurisdiction. This Court 25 therefore need not proceed to the remaining two prongs. Plaintiff has not shown that 26 Defendants have sufficient minimum contacts with Arizona such that this Court’s exercise 27 of specific personal jurisdiction would comport with Defendants’ due process rights. 28 -5- 1 B. GENERAL JURISDICTION 2 Plaintiff also asserts that this Court may have general jurisdiction over Whitney. 3 Plaintiff argues that it be allowed to conduct jurisdictional discovery in order to show that 4 Whitney has continuous and systematic contacts with Arizona in the form of depositors or 5 borrowers. The Third Circuit Court of Appeals, as Plaintiff argues, has confirmed general 6 jurisdiction over an out-of-state bank based partly on the presence of depositors and 7 outstanding loans within the forum state. See Provident Nat’l Bank v. California Fed. Sav. 8 & Loan, 819 F.2d 434 (3d Cir. 1987) (cited in Ballard, 65 F.3d at 1499). There, however, the 9 out-of-state bank maintained a zero balance account with a bank within the forum. Id. at 438. 10 That account involved daily communication and transactions between the banks, and was “a 11 continuous and central part of [the out-of-state bank’s] business.” Id. 12 Here, Whitney has affirmed that it had no such relationship with an Arizona bank, nor 13 any offices or direct operations in Arizona. (Doc. 28-2). Plaintiff merely alleges that a portion 14 of Whitney’s activities is traceable to Arizona. Perhaps general jurisdiction would exist if 15 that portion were sufficiently large. See Lakin v. Prudential Sec., 348 F.3d 704 (8th Cir. 16 2003) (Jurisdictional discovery allowed where a ten million dollar loan portfolio in the state 17 implied multi-year lending relationships with “hundreds, if not thousands of [forum] 18 residents”). But there is no evidence of any business between Whitney and Arizona. Plaintiff 19 essentially requests the Court allow it to conduct a fishing expedition in the hope of 20 discovering some fact upon which general jurisdiction might be based. Without some 21 foundation for this request, the Court will not grant it. See Terracom, 49 F.3d at 562 (“Where 22 a plaintiff’s claim of personal jurisdiction appears to be both attenuated and based on bare 23 allegations in the face of specific denials made by defendants, the Court need not permit even 24 limited discovery.”) (quoting Rich v. KIS Cal., Inc., 121 F.R.D. 254, 259 (M.D.N.C. 1988)). 25 IV. CONCLUSION 26 The Court thus finds that it has neither specific nor general personal jurisdiction over 27 Whitney. The Court also finds that Plaintiff has failed to articulate a sufficient basis for 28 allowing jurisdictional discovery. -6- 1 Accordingly, 2 IT IS ORDERED granting Whitney’s Motion to Dismiss. (Doc. 28). 3 DATED this 16th day of July, 2012. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7-

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