Midamines Sprl Ltd. (Ill. Corp.) et al v. KBC Bank N.V.

Filing 55

AMENDED Memorandum Opinion and Order Signed by the Honorable John J. Tharp, Jr on 1/16/2018. Mailed notice(air, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MIDAMINES SPRL LTD.,
Plaintiff,
v.
KBC BANK N.V.,
Defendant.

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No. 16 C 9429
Judge John J. Tharp, Jr.

AMENDED MEMORANDUM OPINION AND ORDER
This dispute, over a sum of about $100,000, has traveled a long and winding road. What
began in Belgium has made stops in the Democratic Republic of Congo, New York federal and
state courts, the Second Circuit, and now the Northern District of Illinois. Before the Court is a
motion by Defendant KBC Bank N.V. (“KBC”) to dismiss this action on numerous grounds,
including lack of subject matter and personal jurisdiction, collateral estoppel, forum non
conveniens, and failure to state a claim. In short, KBC argues that the plaintiff, Midamines SPRL
Ltd. (“Midamines” or “Midamines Illinois”) (in reality, its sole officer, Hassan Abbas, who also
serves as Midamines’ counsel), should not be permitted to open up yet another front in this
protracted conflict. The Court could not agree more. Among the host of reasons KBC offers for
why this case does not belong here, the Court needs only one: lack of personal jurisdiction.
Because Midamines has failed to show that KBC has any significant ties to Illinois or that its
suit-related conduct is connected to this state in a meaningful way, the complaint is dismissed
without prejudice under Rule 12(b)(2). Furthermore, the complaint appears to be frivolous for
reasons other than lack of personal jurisdiction, and even though this Court does not have
jurisdiction over KBC and cannot resolve the case on the merits, it does have the authority to
assess sanctions for the filing of a frivolous complaint. The Court therefore will require

Midamines and Abbas to show cause why Rule 11 sanctions should not be imposed for filing a
frivolous pleading.
BACKGROUND
A.

Facts 1

KBC is a Belgian bank and insurance company organized under Belgium law with its
principal offices in Brussels. (Grimmig Decl. ¶ 2, ECF No. 17-5.) KBC operates worldwide
through its branches and sister banks in Europe, and has one branch office in the United States,
which is located in New York. (Id. ¶¶ 3-4.) In 2006, Midamines SPRL (“Midamines Congo”), a
diamond mining company registered in the Democratic Republic of Congo, opened a bank
account with one of KBC’s independently operated subsidiaries (the “Antwerp Bank”). 2
(Vanhuysse Decl. ¶¶ 2, 5-6, ECF No. 38-1.) In 2012, the Antwerp Bank closed Midamines
Congo’s account due to a dispute within the company over who had control over the account.
(Id. ¶ 11, 13-14.) After closing the account, the Antwerp Bank issued two bank checks that
represented the balances of two subaccounts—a dollar denominated check in the amount of
$35,110.72 (the “USD Check”) and a Euro denominated check in the amount of €56,414.73 (the
“Euro Check”) (together “the Bank Checks”). (Id. ¶ 20.) Both checks were made payable to
Midamines Congo. (Id.; see also Abbas Decl., Ex. E, ECF No. 44-5.)
On August 8, 2012, the Antwerp Bank delivered the Bank Checks to Abbas in his
capacity as a proxy holder for the Midamines Congo account. (Compl. ¶¶ 8-9, ECF No. 1;
1

The facts in this background section are drawn from allegations in the complaint, which
are presumed true for purposes of this motion, and from declarations and other evidence
submitted by both parties, which the Court may consider on a Rule 12(b)(2) motion. See Purdue
Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782-83 (7th Cir. 2003).
2

The Antwerp Bank, formerly known as Antwerp Diamantse Bank, has since merged
with KBC and no longer exists as a separate entity. (Def. Mem. in Supp. of Renewed Mot. to
Dismiss 3 n.3, ECF No. 39.)

2

Vanhuysse Decl. ¶¶ 15-20.) According to Abbas, the checks served as payment for professional
legal services he rendered to Midamines Congo from 2009 to 2012. (Compl. ¶ 9.) Shortly after
the checks were issued, the Midamines Congo account became the subject of two lawsuits: one
in the Democratic Republic of Congo and another in Belgium. (Vanhuysse Decl. ¶¶ 22-30.) The
Congolese litigation concerned the validity of the documentation Abbas (and others) used to
obtain a proxy on the account and resulted in an order rendering that documentation invalid. (Id.
¶¶ 36-37.) In the Belgian litigation, an Antwerp commercial court issued an injunction
prohibiting the Antwerp Bank from executing any payment instructions relating to the account.
(Id. ¶¶ 22-24.) In accordance with the injunction, on August 24, 2012, the Antwerp Bank stopped
payment on the Bank Checks. (Id. ¶ 24.) The bank also informed Abbas that it could not honor
the checks due to the injunction. (Id. ¶ 25.)
About a month later, on September 26, 2012, Abbas incorporated Midamines Illinois.
(Abbas Decl., Ex. B, ECF No. 44-2.) Shortly thereafter, on October 11, 2012, the USD Check
was deposited at a PNC bank in New York. (Compl. ¶ 10.) The check had been endorsed payable
to a Midamines Illinois account, which had been opened in Illinois. (Abbas Decl. ¶ 9.) Later that
day, KBC New York posted the USD Check for payment and credited Midamines Illinois’
account for $35,110.72, the value of the USD Check. (Compl. ¶ 10; Grimmig Decl. ¶ 10.) KBC
then debited Antwerp Bank’s account for the same amount. (Grimmig Decl. ¶ 10.)
On October 19, 2012, the Antwerp Bank sent KBC an inquiry regarding the $35,110.72
debit and reminded the New York branch that it had issued a stop payment order on the USD
Check. (Id. ¶ 11.) Later that day, KBC New York notified its electronic payment vendor that the
check was subject to a stop order, which had the effect of stopping payment on the check. (Id.

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¶ 12.) KBC New York then reversed the credit on October 23, 2013 and re-deposited the
$35,110.72 into the Antwerp Bank’s account. (Id. ¶ 13.)
The following month, the Euro Check was deposited at a Citibank in New York for
payment to a second Midamines Illinois account. (Abbas Decl. ¶ 13, see also Ex. E.) On
November 14, 2012, the U.S. Bank National Association presented the Euro Check to KBC in
Brussels for payment. (Berkers Decl. ¶ 4, ECF No. 38-5.) KBC, however, refused to honor the
check based on the stop payment order that had been issued by the Antwerp Bank. (Id. ¶ 6.)
B.

Procedural History

Shortly after KBC refused to honor the Euro Check, Abbas, on behalf of himself,
Midamines Illinois, and Midamines Congo, filed suit against KBC and the Antwerp Bank in the
Southern District of New York (the “New York Federal Action”). That suit alleged that KBC and
the Antwerp Bank wrongfully dishonored the Bank Checks and sought damages for fraud,
conspiracy to commit fraud, money laundering, RICO, and unjust enrichment. See Midamines
SPRL Ltd. v. KBC Bank NV, No. 12 C 8089 (RJS), 2014 WL 1116875, at *1 (S.D.N.Y. Mar. 18,
2014). KBC and the Antwerp Bank moved to dismiss the complaint on several grounds,
including forum non conveniens. Id. at *2. The defendants argued that any disputes arising out of
the Midamines Congo account are subject to a forum selection clause that requires litigation in
Belgium. Id. In March 2014, the New York district court agreed and dismissed the suit. Id. at *7.
In so holding, the court found that the forum selection clause was mandatory, extended to Abbas
and Midamines Illinois, and applied to any claim “arising out of [KBC and the Antwerp Bank’s]
refusal to honor the Bank Checks. Id. at *3-6.
Abbas and Midamines Illinois appealed the district court’s decision. In early 2015, the
Second Circuit upheld the district court’s ruling in a summary order. Midamines SPRL Ltd. v.

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KBC Bank NV, 601 F. App’x 43 (2d Cir. 2015). The court found no error in the district court’s
opinion and agreed that the suit was properly dismissed as to all parties on the basis of forum non
conveniens. Id. at 44-45.
Immediately following the Second Circuit’s decision, Abbas and Midamines Illinois filed
suit in New York state court seeking damages relating to both Bank Checks (the “New York
State Action”). In February 2016, the New York state court dismissed the action, in part, because
all of the claims were, or could have been, raised by the plaintiffs in the New York Federal
Action and that the claims were governed by a forum selection clause that required the litigation
to be brought in Belgium. Transcript, Midamines SPRL Ltd. v. KBC Bank N.V., Index No.
100383/2015 (N.Y. Sup. Ct. Feb. 5, 2016). In other words, the court concluded that the plaintiffs
were barred by collateral estoppel from re-litigating Abbas and Midamines Illinois’ claims
concerning the Bank Checks in New York.
In March 2016, Abbas again filed suit in New York federal court, this time against
KBC’s counsel, asserting a claim for tortious interference with business relations (the “Abbas
Litigation.”) The New York district court dismissed the suit soon thereafter. Opinion and Order,
Hassan A. Abbas, Esq. v. Orrick, Herrington, & Sutcliffe LLP, No. 15 C 1545 (RJS) (S.D.N.Y
Mar. 16, 2016). In granting KBC’s motion to dismiss, the court found that “the Complaint does
not come close to satisfying the standard for a tortious interference claim[;] . . . [r]ather, it seems
designed, like many of [Abbas’] previous motions in the [New York Federal Action], to prolong
litigation and continue to harass” KBC’s counsel. Id. at 13. In June 2016, following written
submissions and a hearing, the court issued an order enjoining Abbas from “making any filings
in this Court in this case or in any action involving the allegations set forth in the related [New

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York Federal] Action without first obtaining leave of the Court.” Order at 7, Hassan A. Abbas,
Esq. v. Orrick, Herrington, & Sutcliffe LLP, No. 15 C 1545 (RJS) (S.D.N.Y Mar. 16, 2016).
Following the issuance of this injunction, Abbas sought leave in the New York Federal
Action to file a declaratory suit against KBC. The district court denied the request, stating that
the “contemplated declaratory judgment action is clearly an attempt to relitigate the same issues
raised in the Complaint in this action” and “Abbas makes no attempt to explain why this action
would not also be dismissed under the forum non conveniens doctrine.” Order at 1-2, Midamines
SPRL Ltd. v. KBC Bank NV, No. 12 C 8089 (RJS) (S.D.N.Y. June 27, 2016). After the district
court denied Abbas’ motion for reconsideration, he filed a second request for leave to file an
amended complaint, this time on behalf of Midamines Illinois and Midamines Congo. The court
denied this request as well, stating that Abbas “cannot so cavalierly circumvent the Court’s filing
injunction” by bring the same suit “in the names of other entities that evidently serve as alter
egos for Abbas himself.” Order at 2, Midamines SPRL Ltd. v. KBC Bank NV, No. 12 C 8089
(RJS) (S.D.N.Y. Sept. 12, 2016).
Abbas subsequently appealed the district court’s filing injunction; however, the Second
Circuit recently upheld the ruling in another summary order. Summary Order, Midamines SPRL
Ltd. v. KBC Bank N.V., No. 16-1048-CV (2d Cir. Dec. 6, 2017). The appellate court noted in its
decision that Abbas’ declaratory action claim, which “seeks a judgment that he is entitled to bank
funds allegedly held by KBC,” was both an evasion of the district court’s previous rulings and
“would be immediately dismissed for forum non conveniens if allowed to proceed.” Id. at 5.
Having struck out in New York, Abbas filed suit in this Court on behalf of Midamines
Congo and Midamines Illinois in October 2016. The complaint in this action seeks a declaration
that both entities are entitled to payment on the Bank Checks and also asserts claims for

6

conversion and violations of the Illinois Uniform Commercial Code based on KBC’s refusal to
honor the checks. In December 2016, the Court found that it lacked subject matter jurisdiction
over this matter under 28 U.S.C. § 1332 because both Midamines Congo and KBC are foreign
entities. (Order, ECF No. 28.) The Court, however, granted Abbas’ request to drop Midamines
Congo as a party, thereby leaving “a putative citizen of Illinois as plaintiff and a foreign entity as
a defendant,” id., and (arguably) preserving diversity.
On March 24, 2017, KBC filed a renewed motion to dismiss the remaining plaintiff,
Midamines Illinois. The motion seeks dismissal on several grounds, including: (1) lack of subject
matter jurisdiction, (2) lack of personal jurisdiction, (3) collateral estoppel, (4) forum non
conveniens, and (5) failure to state a claim. During a hearing on KBC’s motion to dismiss,
however, the Court instructed Midamines Illinois to address only the threshold issues concerning
jurisdiction.
DISCUSSION
The parties having fully briefed jurisdiction, the Court concludes that it lacks personal
jurisdiction over this dispute. 3 Midamines offers virtually no support for its assertion that KBC is
subject to both general and specific jurisdiction in Illinois. The complaint therefore is dismissed
under Rule 12(b)(2). Moreover, although Midamines was instructed not address the collateral
estoppel issue, the Court finds after further review that a response is warranted, even at this late
stage. The Court is hard pressed to see how Midamines has any colorable argument that it is
collaterally estopped from litigating this case anywhere other than Belgium. The Court therefore

3

Because the Court dismisses the complaint for want of personal jurisdiction, it need not
address KBC’s argument that the complaint fails for lack of subject matter jurisdiction as well.
See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 578 (1999) (finding that personal
jurisdiction inquiry can precede subject matter jurisdiction inquiry).

7

orders Midamines and Abbas to show cause why they should not be sanctioned for filing an
action in this Court in which Midamines could obtain no relief.
I.

Personal Jurisdiction

The Court addresses first the issue of personal jurisdiction. “A complaint need not
include facts alleging personal jurisdiction. However, once the defendant moves to dismiss the
complaint under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, the
plaintiff bears the burden of demonstrating the existence of jurisdiction.” Purdue Research
Found., 338 F.3d at 782 (citations and alterations omitted). Where, as here, the issue is decided
on the basis of written materials without an evidentiary hearing, the plaintiff needs to establish
only a prima facie case for personal jurisdiction. N. Grain Mktg., LLC v. Greving, 743 F.3d 487,
491 (7th Cir. 2014). Moreover, the Court must accept as true at this stage all well-pled facts in
the complaint and resolve any factual disputes in favor of the plaintiff. Id. “[A]ny facts contained
in the defendant’s affidavits that remain unrefuted by the plaintiff,” however, are also regarded
as true. GCIU-Employer Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1020 n.1 (7th Cir. 2009).
Because this Court is sitting in diversity, it has personal jurisdiction over KBV only if an
Illinois court of general jurisdiction could exercise jurisdiction in this matter. N. Grain Mktg.,
743 F.3d at 491 (citing Fed. R. Civ. P. 4(k)(1)(A)). Illinois courts are permitted to exercise
jurisdiction over a defendant “as to any cause of action arising from . . . (2) [t]he commission of
a tortious act within [Illinois; or] . . . (10) [t]he acquisition of ownership, possession or control of
any asset or thing of value present within [Illinois] when ownership, possession or control was
acquired.” 735 Ill. Comp. Stat. 5/2–209(a)(2), (10). Moreover, and more importantly, Illinois
courts are permitted to exercise jurisdiction “on any other basis now or hereafter permitted by the
Illinois Constitution and the Constitution of the United States.” Id. § 5/2–209(c). Illinois’ long-

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arm statute thus extends jurisdiction to wherever the Constitution allows and the plaintiff need
only demonstrate that personal jurisdiction comports with the Due Process Clause. N. Grain
Mktg., 743 F.3d at 492.
Due process requires that a defendant have sufficient “minimum contacts” with the forum
state such that litigating the suit in the state “does not offend traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation
marks omitted). That is, the defendant must “reasonably anticipate being haled into court” in the
forum state based on its purposeful contacts with that state. Burger King Corp. v. Rudzewicz, 471
U.S. 462, 474 (1985) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980)). There are two types of contacts that may give rise to personal jurisdiction: general and
specific. Midamines argues that both types are applicable, but neither permits suit in Illinois
against KBC.
A.

General Jurisdiction

General personal jurisdiction arises when a defendant has “continuous and systematic”
contacts with the forum state. uBid, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425-26 (7th Cir.
2010) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16
(1984)). “The threshold for general jurisdiction is high[.]” Tamburo v. Dworkin, 601 F.3d 693,
701 (7th Cir. 2010) (citing Purdue Research Found., 338 F.3d at 787 n.16). Recently, the
Supreme Court has stated that for general jurisdiction to apply, the defendant must be
“essentially at home in the forum State.” Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014)
(quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). “The
‘paradigm’ forums in which a corporation is ‘at home’ are the corporation’s place of
incorporation and its principal place of business.” BNSF Railway Co. v. Tyrrell, 137 S. Ct. 1549,
1558 (2017) (citing Daimler, 134 S. Ct. at 760; Goodyear, 564 U.S. at 924). The exercise of
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general jurisdiction is not limited to these forums, however. “[I]n an ‘exceptional case,’ a
corporate defendant’s operations in another forum ‘may be so substantial and of such a nature as
to render the corporation at home in that State.’” Id. (quoting Daimler, 134 S. Ct. at 761 n.19).
Despite Midamines’ contention that KBC has continuous and systematic contacts with
Illinois, (Pl. Opp’n to Def. Renewed Mot. to Dismiss 18, ECF No. 43), the state does not begin
to qualify as “home” for KBC. Illinois is neither KBC’s place of incorporation nor its principal
place of business. Rather, it is a Belgian bank and insurance company, organized under Belgian
law, with its primary offices in Brussels. (Grimmig Decl. ¶ 2.) KBC operates worldwide, but is
centered in Europe. (Id. ¶ 3.) And while it maintains a branch in the United States, that office is
located in New York, not Illinois. (Id. ¶ 4.) KBC’s only connection with Illinois is that it has
approximately 12 active clients in the state. (Id. ¶ 5.) But a handful of clients—especially given
KBC’s worldwide operations—cannot serve as a basis for general jurisdiction. See Daimler, 134
S. Ct. at 752, 761(finding no general jurisdiction in forum state that accounted for 2.4% of
defendant’s worldwide sales, stating that “the same global reach would presumably be available
in every other state in which [the defendant’s] sales are sizable”); see also Nicholson v. ETelequote Ins., Inc., No. 14 C 4269, 2015 WL 5950659, at *4 (N.D. Ill. Oct. 13, 2015) (“[D]oing
10 percent of your business in Illinois does not make a corporation ‘at home’ in Illinois.”)
In the alternative, Midamines argues that it should be permitted to pursue discovery
regarding the “extent of KBC[’s] contacts, . . . clients, and activities in Illinois” to confirm
whether KBC is, in fact, subject to general jurisdiction. (Pl. Opp’n 18.) While the Court has
discretion to permit jurisdictional discovery, see Cent. States, Se. & Sw. Areas Pension Fund v.
Reimer Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000), it declines to do so here. At a
minimum, the plaintiff must establish a prima facia case for personal jurisdiction before

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discovery should go forward. Id.; see Sullivan v. Sony Music Entm’t, No. 14 C 731, 2014 WL
5473142, at *5-6 (N.D. Ill. Oct. 29, 2014) (stating that jurisdiction discovery is not warranted
“where the defendant has provided affirmative evidence that refutes the plaintiff’s assertion of
jurisdiction”). Midamines, however, has failed to make any showing that even suggests the
possibility that KBC could be subject to general jurisdiction in Illinois. In any event, the Court
fails to see how any amount of discovery regarding KBC’s twelve Illinois-based clients could
create such a basis. Thus, the Court rejects Midamines’ request for jurisdiction discovery and
concludes that KBC is not subject to general personal jurisdiction.
B.

Specific Jurisdiction

Bereft as Midamines’ general jurisdiction argument is, its claim that Illinois may exercise
specific jurisdiction over KBC may be even weaker. Specific jurisdiction “focuses on ‘the
relationship among the defendant, the forum, and the litigation.’” Walden v. Fiore, 134 S. Ct.
1115, 1121 (2014) (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984)). Stated
differently, “the defendant’s contacts with the forum state must directly relate to the challenged
conduct or transaction.” N. Grain Mktg., 743 F.3d at 492 (internal quotations marks and citation
omitted). Specific jurisdiction is appropriate only “where (1) the defendant has purposefully
directed his activities at the forum state or purposefully availed himself of the privilege of
conducting business in that state, and (2) the alleged injury arises out of the defendant’s forumrelated activities.” Id. (citation omitted). Moreover, the exercise of personal jurisdiction must not
offend “traditional notions of fair play and substantial justice.” Id. (citation omitted).
Where, as is the case here, the complaint sounds in intentional tort, the initial inquiry
focuses on whether the defendant’s conduct was “purposefully directed” at the forum state.
Tamburo, 601 F.3d at 702. Courts traditionally apply the Calder effects test to assess purposeful
direction, which requires the plaintiff to show “(1) intentional conduct (or ‘intentionally and
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allegedly tortious conduct’); (2) expressly aimed at the forum state; (3) with the defendant’s
knowledge that the effects would be felt—that is, the plaintiff would be injured—in the forum
state.” Id. at 703. Midamines argues that KBC has purposefully directed its tortious conduct at
Illinois for three reasons, but none are availing.
Midamines’ principal argument is that KBC “intentionally sent unauthorized messages to
Illinois, through the Illinois banking system” so that KBC could “enter into [Midamines’] Illinois
bank account to unlawfully take possession” of the funds at issue. (Pl. Opp’n 19.) In support of
this argument, Midamines relies on two Seventh Circuit cases. The first case, FMC Corp. v.
Varanos, involves a regional office manager in Greece who was sued by her employer in a RICO
action for faxing false expense reports to the employer’s headquarters in Chicago. 892 F.2d
1308, 1309-10 (7th Cir. 1990). The court affirmed a finding of personal jurisdiction because the
manager had sent the faxes to Illinois “to effectuate her scheme to defraud” her employer and
thus “should have foreseen that she could be required to answer for her actions in Illinois.” Id. at
1313. In the second case, Heritage House Restaurants, Inc. v. Continental Funding Group, Inc.,
a nonresident company allegedly misrepresented to an Illinois company during a phone
conversation, in violation of the Illinois Consumer Fraud Act, that the entire amount of its
deposit was secured for repayment. 906 F.2d 276, 278-79 (7th Cir. 1990). The appellate court
upheld personal jurisdiction under the tortious act provision of Illinois’s long-arm statute, finding
that by initiating the phone call, the nonresident company “clearly evidenced an intent to affect
an Illinois interest, because [it] knew that [the other company] was an Illinois corporation
investing money for two Illinois limited partnerships.” Id. at 282.
Midamines’ argument is unavailing for two reasons. First, it fails to account for the Euro
Check. There is no dispute that only the USD Check was credited and withdrawn from

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Midamines’ bank account. (Compl. ¶ 13; Beckers Decl. ¶¶ 5-6.) In other words, KBC never
issued payment on the Euro Check and, as such, never sent an unauthorized message to Illinois
to take possession of those funds. Consequently, KBC has not aimed any conduct with respect to
the Euro Check at Illinois, let alone purposefully.
Second, contrary to Midamines’ contention and in contrast to the two cases it cites, there
is no basis to conclude that KBC intentionally sent a banking message to Illinois or that KBC
knew that the credit was being pulled from an account that was opened in Illinois. Midamines
attempts to establish KBC’s knowledge and intent based on three documents. (Pl. Opp’n 22.)
The first two are emails between Abbas and PNC Bank employees dated October 17, 2012 in
which PNC employees confirm that the USD Check funds are available to Midamines and set up
a wireless payment service for Midamines’ account. (Hassan Decl., Exs. C & F, ECF Nos. 44-3,
-6.) The third document is an extract summary of Midamines’ online banking statement from
2012 (which Abbas appears to have recreated). (Id. at Ex. D, ECF No. 44-4.) At most, these
documents show that the funds underlying the USD Check were credited and withdrawn from
Midamines’ account—a fact that KBC does not dispute. However, there is no discussion or
indication in any of the documents that KBC knew that the funds were headed for Illinois. Nor is
there evidence that any KBC employees received the emails or the summary prior to this suit.
Nor is there any indication from the USD Check or how it was deposited that points
toward Illinois. The check was drawn on a Belgian bank, issued to Midamines Congo, and
deposited at a PNC branch in New York. (Compl. ¶ 10; Abbas Decl., Ex. E at 1-2.) Although the
check was later made payable to a Midamines Illinois account number and KBC initially
processed payment, that alone does not charge KBC with the knowledge required to establish
specific jurisdiction. See Froning & Deppe, Inc. v. Cont’l Ill. Nat’l Bank & Trust Co., 695 F.2d

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289, 291-92 (7th Cir. 1982) (agreeing that “it would be unreasonable to charge each bank with
the knowledge that it may at any time be called to answer in the courts of any of the fifty states
from which a check” originated or where a check was ultimately deposited “[i]n view of the
enormous volume of interstate check processing which every bank performs on a daily basis”).
The second argument that Midamines advances in support of its targeting theory is that
even if KBC did not have actual knowledge that the USD Check was ultimately deposited in
Illinois, it could have foreseen that the funds were destined for Illinois based on the fact that
Midamines was incorporated and had its principal place of business in Illinois. (Pl. Opp’n 22.)
This argument is meritless for two reasons. For starters, there is no evidence in the record that
KBC even knew that Abbas incorporated Midamines in Illinois prior to the transactions. But
even if there were such evidence, personal jurisdiction must be established by ties with the
putative forum that the defendant creates, not the plaintiff.
The Seventh Circuit explained this point in depth in Advanced Tactical Ordnance
Systems, LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir. 2014). There, the court of
appeals overturned a finding of personal jurisdiction in a trademark infringement action brought
in Indiana federal court. Id. at 803-04. The district court had found that the alleged infringer, a
California company, was subject to specific jurisdiction in Indiana, in part, because it “knew that
the plaintiff was an Indiana company and could foresee that its misleading emails and sales
would harm the plaintiff in Indiana.” Id. at 802. On appeal, the Seventh Circuit held that the
Supreme Court’s decision in Walden called for the opposite conclusion. Specifically, it discussed
how in Walden, “the defendant knew that the plaintiffs were going to Nevada, and it was
foreseeable that they would want to use their money there, but the [Supreme] Court squarely
rejected this as a permissible basis for jurisdiction.” Id. The appellate court then reiterated that it

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is not enough that the defendant’s “conduct affected plaintiffs with connections to the forum
State[,]” but rather “[t]he relationship between the defendant and the forum must arise out of
contacts that the defendant himself creates with the forum State.” Id. (quoting Walden, 134 S. Ct.
at 1118, 1126) (internal quotation marks omitted).
Midamines’ final argument is that the Calder test is satisfied because the injury occurred
in Illinois, even if all other relevant conduct occurred outside of the state. (Pl. Opp’n 20-21.)
Citing Janmark, Inc. v. Reidy, 132 F.3d 1200 (7th Cir. 1997) and Indianapolis Colts, Inc. v.
Metropolitan Baltimore Football Club Ltd. P’ship, 34 F.3d 410 (7th Cir. 1994), Midamines
contends that “the location of the injury is vital” to the targeting analysis. (Pl. Opp’n 20.)
Midamines, however, fails to realize that the Seventh Circuit reexamined—and rejected—this
argument in Advanced Tactical as well. The appellate court explained that, following Walden,
the state in which the victim of a tort suffers an injury cannot serve as a proper forum where, as
here, the plaintiff is the “only link between the defendant and the forum.” Advanced Tactical,
751 F.3d at 802 (citing Walden, 134 S. Ct. at 1122.) In reaching this conclusion, the Seventh
Circuit discussed Janmark and stated that “[a]ny decision that” runs counter to Walden “can no
longer be considered authoritative.” Id.
At bottom, the only action KBC has taken in the context of this litigation is to use the
interstate banking system (in New York) to credit and then reverse a payment to Midamines.
That Midamines deposited the payment in an account opened in Illinois was entirely fortuitous
and cannot serve as grounds for specific jurisdiction over KBC. See Walden, 134 S. Ct. at 1123
(“Due process requires that a defendant be haled into court in a forum State based on his own
affiliation with the State, not based on the ‘random, fortuitous, or attenuated’ contacts he makes
by interacting with other persons affiliated with the State.”) (citing Burger King, 471 U.S. at

15

475); Skoot v. State St. Bank & Tr. Co., No 97 C 50126, 1997 WL 792985, at *4 (N.D. Ill. Dec.
22, 1997) (finding that Massachusetts banks’ contacts with Illinois were “random, fortuitous, and
attenuated” and did not give rise to specific jurisdiction where bank used interstate banking
system to process forged check that was ultimately deposited in Illinois). Thus, Midamines fails
to establish personal jurisdiction and the Court dismisses its complaint pursuant to Rule 12(b)(2).
II.

Rule 11 Sanctions

Having dismissed the complaint, the Court turns to the matter of sanctions. Under Rule
11(c)(3) of the Federal Rules of Civil Procedure, a court may on its own initiative require a party
and its attorney to show cause why a pleading does not violate the requirements set forth in
subsection (b) of the Rule. 4 Fed. R. Civ. P. 11(c)(3). There is reason here for concern that the
complaint filed by Midamines and Abbas may run afoul of Rule 11(b). In particular, there is a
substantial question as to whether Midamines is collaterally estopped from asserting the claims
set forth in the complaint by the prior ruling in the New York Federal Action that Midamines’
claim to the bank funds held by KBC must be litigated in Belgium.
Although the Court did not ask Midamines to address this issue (the Court limited its
response to jurisdictional issues only), no colorable response immediately presents itself to the
Court. The doctrine of collateral estoppel (also known as issue preclusion) dictates that “once an
issue is actually and necessarily determined by a court of competent jurisdiction, that

4

Although the Court concludes that it lacks personal jurisdiction over KBC and thus
cannot rule on the merits of Midamines’ claims, it nevertheless may assess whether Midamines,
and its counsel, Abbas, violated the requirements of Rule 11 by filing a frivolous complaint. Cf.
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395 (1990) (finding voluntary dismissal under
Rule 41(a) does not deprive district court of authority to impose Rule 11 sanctions). “The
violation of Rule 11 is complete when the paper is filed,” Szabo Food Serv., Inc. v. Canteen
Corp., 823 F.2d 1073, 1077 (7th Cir. 1987), so the filing gives rise to the Court’s authority to
consider sanctions of the responsible party regardless of whether it otherwise has jurisdiction
over the merits of a claim.

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determination is conclusive in subsequent suits based on a different cause of action involving a
party to the prior litigation.” Carter v. C.I.R., 746 F.3d 318, 321 (7th Cir. 2014) (quoting
Montana v. United States, 440 U.S. 147, 153 (1979)). Where, as here, a party seeks preclusion
based on a federal-court judgment, federal common law provides the rule of decision. DeGuelle
v. Camilli, 724 F.3d 933, 935 (7th Cir. 2013) (citing Taylor v. Sturgell, 552 U.S. 880, 892
(2008)). In the Seventh Circuit, the doctrine applies where “[t]he party against whom the issue
has been resolved must have had, first, a ‘full and fair opportunity’ to litigate the issue in the
previous suit . . . and, second, a meaningful opportunity to appeal the resolution of the issue.”
Carter, 746 F.3d at 321 (quoting DeGuelle, 724 F.3d at 935).
There seems to be little doubt that Midamines had a full and fair opportunity (which it
pursued) to litigate the issue of forum non conveniens. KBC argued in its motion to dismiss in
the New York Federal Action that Midamines’ claim to the Bank Checks was subject to the
exclusive jurisdiction of Belgian courts under a forum selection clause. Midamines, 2014 WL
1116875, at *4-6. After Midamines had a chance to brief the issue, the New York district court
found that the clause was mandatory and that it applied to both Midamines and its collection
efforts. Id. Midamines cannot reasonably argue that it did not have a meaningful opportunity to
appeal the issue either. Following the New York district court’s dismissal of its suit, Midamines
appealed the issue of forum non conveniens and argued in the Second Circuit that KBC could not
enforce the forum selection clause and that the clause did not apply to Midamines or its claims.
Midamines, 601 F. App’x at 44-45. The appellate court rejected both arguments. Id. And just
last week, the Second Circuit stated that any claim predicated on Midamines’ entitlement to bank
funds allegedly held by KBC “would be immediately dismissed for forum non conveniens if

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allowed to proceed.” Summary Order at 5, Midamines SPRL Ltd. v. KBC Bank N.V., No. 161048-CV (2d Cir. Dec. 6, 2017).
Because this appears to be a textbook example of collateral estoppel, the Court concludes
that there is a substantial question as to whether Abbas complied with his Rule 11 obligations
when he filed the complaint on Midamines’ behalf. “Rule 11 imposes a duty on attorneys [and
parties] to ensure that any papers filed with the court are well-ground in fact, legally tenable, and
not interposed for any improper purpose.” Brunt v. Serv. Employees Int’l Union, 284 F.3d 715,
721 (7th Cir. 2002); see also Fed. R. Civ. P. 11(c)(1) (“[T]he court may impose an appropriate
sanction on any attorney, law firm, or party that violated the rule or is responsible for the
violation.”). “The rule is principally designed to prevent baseless filings,” Brunt, 284 F.3d at 721
(citation omitted), which includes pleadings that assert claims upon which relief is clearly barred,
see Bethesda Lutheran Homes and Servs., Inc. v. Born, 238 F.3d 853, 859 (7th Cir. 2001)
(finding Rule 11 sanctions warranted where “it should have been obvious to any lawyer that
relief was barred on multiple grounds, including res judicata [and] judicial estoppel”); see also
5A Charles Alan Wright et al., Federal Practice & Procedure § 1335 (3d ed.) (discussing Rule
11 criteria).
To address this issue, the Court directs Midamines and Abbas to show cause why
sanctions should not be imposed for filing a claim as to which Midamines is collaterally
estopped from re-litigating by the New York district court’s holding that it is subject to a forum
selection clause. 5 (See Def. Mem. 21-23.) Following the submission of their brief, the Court will

5

The Court is mindful that the complaint offers several reasons why the New York
district court’s ruling on forum non conveniens does not preclude Midamines from filing the
present action, including, among others, that the New York district court’s dismissal was without
prejudice, that the prior action did not involve a claim for declaratory judgment or conversion,
and that the forum selection clause no longer exists. (Compl. ¶¶ 32-37.) Because these arguments
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either discharge the show cause order or hold a hearing to determine whether Abbas and/or
Midamines should be sanctioned under Rule 11 for filing a frivolous suit that was subject to
immediate dismissal on the basis of collateral estoppel. If necessary, the Court will request
briefing from KBC prior to the hearing.
*

*

*

For the reasons stated above, the complaint is dismissed under Rule 12(b)(2) without
prejudice to Midamines refiling in an appropriate forum, and the case will be administratively
terminated on the Court’s docket. The Court orders Midamines and Abbas to show cause why
they should not be sanctioned under Rule 11 for filing a complaint that is barred under the
doctrine of collateral estoppel. They are directed to file a brief that addresses the issues outlined
above no later than January 12, 2018. A hearing date, if required, will be set following review of
this submission.

John J. Tharp, Jr.
United States District Judge

Date: January 16, 2018

are raised in the complaint, not a legal brief, and are not supported with any legal citations, the
Court declines to consider them at this time. The Court, however, will consider any argument
that Midamines and Abbas raise in their rule to show cause brief.

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