Community Finance Group, Inc. v. Stanbic Bank Limited et al

Filing 19

OPINION AND ORDER...Defendant Stanbic Bank Limited ("Stanbic") moves to dismiss the complaint primarily on the ground that Stanbic is not subject to personal jurisdiction in New York....Stanbic's February 5, 2015 motion to dismiss the complaint is granted. The Clerk of Court shall close the case. (Signed by Judge Denise L. Cote on 7/10/2015) (gr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
COMMUNITY FINANCE GROUP, INC. A
:
MINNESOTA CORPORATION,
:
:
Plaintiff,
:
:
-v:
:
STANBIC BANK LIMITED and GREAT LAKES
:
AUTO TECH INT’L LTD.,
:
:
Defendants.
:
:
-------------------------------------- X

14cv5216(DLC)
OPNION
AND ORDER

APPEARANCES:
For Plaintiff:
Jay Kanetkar
530 Sylvan Ave.
Englewood Cliffs, NJ 07632
For Defendant Stanbic Bank Limited:
Mark G. Hanchet
Robert W. Hamburg
Mayer Brown LLP
1221 Avenue of the Americas
New York, NY 10020
DENISE COTE, District Judge:
Plaintiff Community Finance Group, Inc. (“CFG”) brings this
diversity action alleging state law claims based on negligence
and breach of fiduciary duty.

Defendant Stanbic Bank Limited

(“Stanbic”) 1 moves to dismiss the complaint primarily on the
ground that Stanbic is not subject to personal jurisdiction in
Defendant Great Lakes Auto Tech Int’l Ltd. (“Great Lakes”), a
Kenyan company, has not made an appearance in this case.
1

New York.

For the following reasons, Stanbic’s motion to

dismiss is granted.
BACKGROUND
The following facts are asserted in the complaint and taken
from documents integral to those claims.

This cause of action

arises out of CFG’s attempt to purchase 300 kilograms of gold
bullion from defendant Great Lakes and a related company,
Zilicon Freighters, Ltd. (“Zilicon”), both Kenyan entities.
In February 2009, CFG became aware of the opportunity to
purchase gold bullion located in Kenya through discussions with
John Saina (“Saina”), a Kenyan national.

As part of CFG’s due

diligence on the transaction, CFG held a telephone call with
Illunga Ngoei (“Ngoei”) on May 27, 2009, a representative of a
gold mine owner and Zilicon.

At some point in May, CFG decided

to go forward with the transaction provided that the existence
of the gold could be verified.
Saina traveled to Kenya on May 29, to investigate the
transaction.

On June 1, Saina went to the Kenyan offices of

defendant Great Lakes on CFG’s behalf to verify the existence of
the gold and take samples.

Following this inspection, CFG and

Zilicon entered into a contract for the delivery of 300
kilograms of gold to the United States on June 2. 2

2

On June 4,

The complaint states that the Zilicon and the CFG entered into
2

CFG also agreed to transfer $350,000 to Zilicon’s attorney to be
held in escrow to cover Kenyan taxes, customs fees, and storage.
On June 11, a representative of CFG traveled to Kenya to
verify the existence of the gold and complete the transaction in
person.

Following the representative’s review, CFG agreed to

immediately transfer the $350,000 to a bank account belonging to
Great Lakes to expedite the delivery.

On June 12, CFG initiated

a wire transfer of $350,000 from its bank account in Minnesota
to Great Lakes’ bank account maintained at Stanbic.

The wire

transfer was routed through Stanbic’s correspondent account with
Deutsche Bank Trust Company (“Deutsche Bank”) in New York.
On June 17, CFG received a fax copy of the wire
transmission from Stanbic (“Wire Transfer Receipt”).

The Wire

Transfer Receipt reads: “NOTE THAT BEFORE WE PAID THE
BENEFICIARY WE DID OUR DUE DILIGENCE AND THE BENEFICIARY BROUGHT
TO THE BANK DOCUMENTS SHOWING THAT THEY WE(RE) SUPPLYING SOME
MATERIAL.”
At some point after the wire transfer, CFG discovered the
transaction was fraudulent.

On June 22 and 23, CFG filed

complaints with various authorities in Kenya, resulting in the
a contract for the delivery of the gold on June 2. The
complaint also states that the parties executed a purchase
agreement for 300 kilograms of gold on June 5. The complaint
does not clarify the different purposes these documents served,
and the contracts have not been appended to the complaint.
3

arrest of Ngoei and other participants in the fraud.

CFG also

discovered Ngoei and the other participants had perpetrated this
scheme at least once before using an account at Stanbic.
CFG has already filed two lawsuits related to these events.
On March 17, 2010, CFG filed suit in the District of Minnesota
against Kenya and Kenyan government entities.

Cmty. Fin. Grp.,

Inc. v. Republic of Kenya, 663 F.3d 977 (8th Cir. 2011).

The

district court dismissed the action for a lack of subject matter
jurisdiction.

Id.

The Court of Appeals for the Eighth Circuit

affirmed the dismissal.

Id.

CFG then filed suit against Stanbic in the District of New
Jersey in June 2012.

Cmty. Fin. Grp., Inc. v. Stanbic Bank

Ltd., 12cv3851 (FSH), 2013 WL 3223371 (D.N.J. June 25, 2013).
The district court denied Stanbic’s first motion to dismiss for
lack of personal jurisdiction without prejudice and allowed the
plaintiff to obtain jurisdictional discovery from Stanbic.
Discovery included documents related to Stanbic’s account with
Deutsche Bank.

Upon completion of discovery, Stanbic renewed

its motion to dismiss.

The district court then dismissed the

case for lack of personal jurisdiction over Stanbic on June 25,
2013.

Id. at *5.

CFG filed the instant action on July 17, 2014.

Stanbic

moved to dismiss the complaint on February 5, 2015, primarily on
4

the ground that this Court lacks personal jurisdiction over
Stanbic.

Stanbic also moves to dismiss CFG’s claims as

untimely, for failure to state a claim, and under the forum non
conveniens doctrine.

The motion was fully submitted on March

19.
In the complaint, CFG alleges that there is jurisdiction
over this matter because the plaintiff is a citizen of
Minnesota, the defendants are citizens of Kenya, and the amount
in controversy exceeds $75,000.

The complaint also alleges that

“Defendant [Stanbic] maintains its principle [sic] United States
bank account at [Deutsche Bank], which is a citizen of New York,
having an address of 60 Wall Street New York, NY 10005 and
through which [Stanbic] conducts all United States Dollars
wiring activity.”
In support of its motion to dismiss for lack of personal
jurisdiction, Stanbic attaches an affidavit from Stanbic’s
Senior Legal Counsel, Eliud Ogutu (“Ogutu”) and an affidavit
from John Ohaga, a Kenyan attorney admitted to practice before
the High Court of Kenya.

Ogutu represents in his affidavit that

Stanbic does not maintain an office, telephone number, or
mailing address, or employ any personnel in the United States.
In opposition to Stanbic’s motion, CFG attaches four agreements
governing the relationship between Stanbic and Deutsche Bank
5

(“Deutsche Bank Agreements”), the Wire Transfer Receipt,
statements from Stanbic’s Deutsche Bank account, an affidavit
from Andrew Vilenchik, the general manager at CFG, and an
affidavit from Ogutu filed in the New Jersey litigation.

CFG

also attaches printouts from a website regarding Standard Bank
Group.

These printouts state that Stanbic is a member of

Standard Bank Group, and describe the Standard Bank Group as
having a New York office.
DISCUSSION
“In order to survive a motion to dismiss for lack of
personal jurisdiction, a plaintiff must make a prima facie
showing that jurisdiction exists.”

Licci v. Lebanese Canadian

Bank, SAL, 732 F.3d 161, 167 (2d Cir. 2013) (citation omitted)
(Licci II).

In evaluating whether this standard is met, the

pleadings and any supporting materials are construed in the
light most favorable to the plaintiff.

Id.

“This showing may

be made through the plaintiff’s own affidavits and supporting
materials, containing an averment of facts that, if credited,
would suffice to establish jurisdiction over the defendant.”
Southern New England Telephone Co. v. Global NAPs Inc., 624 F.3d
123, 138 (2d Cir. 2010) (citation omitted).

On the other hand,

a court “will not draw argumentative inferences in the
plaintiff’s favor.”

In re Terrorist Attacks on September 11,
6

2001, 538 F.3d 71, 93 (2d Cir. 2008) (citation omitted).
Furthermore, a plaintiff may not rely on conclusory statements
without any supporting facts, as such allegations would “lack
the factual specificity necessary to confer jurisdiction.”
Jazini v. Nissan Motor Co., Ltd., 148 F.3d 181, 185 (2d Cir.
1998).

In resolving Rule 12(b)(2) motions, a court is not

“bound to accept as true a legal conclusion couched as a factual
allegation.”

Id. (citation omitted).

In a diversity case, the issue of personal jurisdiction
must be determined according to the law of the forum state.
D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 104 (2d Cir.
2006).

A district court may exercise jurisdiction over any

defendant who would be subject to the jurisdiction of a court of
general jurisdiction in the state in which the district court is
located.

Fed. R. Civ. P. 4(k)(1)(a).

If the exercise of

jurisdiction is appropriate under the state’s statutes, the
court then must decide whether jurisdiction is proper under the
Due Process Clause of the Fourteenth Amendment.

MacDermid, Inc.

v. Deiter, 702 F.3d 725, 728 (2d Cir. 2012).
I. General Jurisdiction
Personal jurisdiction may be exercised over a defendant who
is subject to general or specific jurisdiction in the forum
state.

Under N.Y. C.P.L.R. § 301, general jurisdiction exists
7

over a foreign corporation that is doing business in the state
“not occasionally or casually, but with a fair measure of
permanence and continuity.”

Wiwa v. Royal Dutch Petroleum Co.,

226 F.3d 88, 95 (2d Cir. 2000) (citation omitted); cf. Daimler
AG v. Bauman, 134 S. Ct. 746, 760-61 (2014) (noting that under
the Due Process Clause, general jurisdiction over a corporation
is limited to the place of incorporation, principal place of
business, and where the “corporation’s affiliations with the
State are so continuous and systematic as to render it
essentially at home in the forum State” (citation omitted)).
A fact-specific inquiry is necessary to determine whether a
corporation’s contacts with New York demonstrate “continuous,
permanent and substantial activity.”

Wiwa, 226 F.3d at 95

(citing Landoil Res. Corp. v. Alexander & Alexander Servs., 918
F.2d 1039, 1043 (2d Cir. 1990)).

The contacts to be considered

include the existence of an office in New York, the solicitation
of business in New York, the presence of property in New York,
and the presence of employees or agents in New York.
918 F.2d at 1043.

Landoil,

Solicitation of business alone is

insufficient to find general jurisdiction.

Id.

The plaintiff does not allege sufficient facts to support a
finding of general jurisdiction.

CFG asserts in its brief that

Stanbic maintains an office in New York.
8

The only evidence

submitted by CFG, however, shows that Standard Bank Group, of
which Stanbic is a member, has a New York office.

No additional

facts are alleged to explain the relationship between Standard
Bank Group and Stanbic, and Standard Bank Group is not a
defendant in this action.

Moreover, the plaintiff does not

allege that Stanbic’s principal place of business is in New
York, that Stanbic owns property in New York, or that Stanbic
solicits business in New York.

At most, the plaintiff argues

that Stanbic’s principal U.S. bank account is in New York, and
Standard Bank Group has a New York office.

This is insufficient

to establish a prima facie showing that Stanbic is subject to
general jurisdiction in New York.
II. Specific Jurisdiction
New York’s long-arm statute provides for specific personal
jurisdiction over certain non-domiciliaries.
302(a).

N.Y. C.P.L.R. §

In relevant part, Section 302(a)(1) allows the exercise

of personal jurisdiction over an out-of-state defendant if the
defendant “transacts any business within the state or contracts
anywhere to supply goods or services in the state.”
302(a)(1).

Id. §

“To establish personal jurisdiction under section

302(a)(1), two requirements must be met: (1) The defendant must
have transacted business within the state; and (2) the claim
asserted must arise from that business activity.”
9

Eades v.

Kennedy, PC Law Offices, No. 14-104-CV, 2015 WL 3498784, at *2
(2d Cir. June 4, 2015) (citing Licci II, 732 F.3d at 168).
“[T]he use of a New York correspondent bank account,
standing alone, may be considered a transaction of business
under the long-arm statute if the defendant’s use of the
correspondent account was purposeful.”
168 (citation omitted).

Licci II, 732 F.3d at

“[D]etermining what facts constitute

‘purposeful availment’ . . . always requires a court to closely
examine the defendant’s contacts for their quality.”

Licci v.

Lebanese Canadian Bank, SAL, 20 N.Y.3d 327, 338 (2012) (Licci
I).
Purposeful activities are volitional acts by which
the non-domiciliary avails itself of the privilege
of conducting activities within the forum State,
thus invoking the benefits and protections of its
laws. More than limited contacts are required for
purposeful activities sufficient to establish that
the non-domiciliary transacted business in New York.
Paterno v. Laser Spine Inst., 24 N.Y.3d 370, 376 (2014)
(citation omitted).
“[C]omplaints alleging a foreign bank’s repeated use of a
correspondent account in New York on behalf of a client . . .
show purposeful availment . . . .”
(citation omitted).

Licci II, 732 F.3d at 168

Facts, however, showing that the

defendant’s involvement in the use of a bank account was
essentially “adventitious -- i.e., it was not even [the
10

defendant’s] doing” -- will not suffice to establish purposeful
availment.

Licci I, 20 N.Y.3d at 338; cf. Eades, 2015 WL

3498784, at *3 (describing the defendant’s transaction as
“active (rather than responsive)” in finding the defendant’s
activities purposeful).
The plaintiff alleges only one connection between this case
and New York: the wire transfer of funds from CFG to Great Lakes
through Stanbic’s Deutsche Bank correspondent account.

The

plaintiff also alleges that a similar transaction took place
before, but provides no additional allegations.

Taking all

reasonable inferences in the plaintiff’s favor, these
allegations do not constitute a prima facie showing that
Stanbic’s use of the correspondent account was purposeful.

In

Licci, the plaintiff alleged that the defendant foreign bank
executed dozens of wire transfers using its correspondent
account in New York for an account held by a “financial arm” of
a terrorist organization.

Licci II, 732 F.3d at 166, 168.

The

“frequency and deliberate nature of [the defendant’s] use” of
the correspondent account was “determinative.”

Id. at 168.

Here, plaintiff provides evidence of only one transaction which
relates to the claim at hand.

Moreover, this use of the

correspondent account was initiated by a party other than
Stanbic.

Absent an established course of dealing, the use of
11

the correspondent account to complete the wire transfer was
“adventitious,” that is to say “not even [Stanbic’s] doing.”
Licci I, 20 N.Y.3d at 338 (citation omitted).

Adventitious uses

of a New York bank account are insufficient to demonstrate that
the use of the account was “purposeful.”
The plaintiff primarily argues in opposition to Stanbic’s
motion to dismiss that Stanbic has consented to jurisdiction in
New York through the Deutsche Bank Agreements.

This argument

fails to establish that this Court has personal jurisdiction
over Stanbic as it relates to the plaintiff’s claims.

The

Deutsche Bank Agreements contain materially identical choice of
forum provisions.

In the Deutsche Bank Agreements, Stanbic and

Deutsche Bank consent to jurisdiction in New York for litigation
“arising []under” or “relating []to” the Agreements.
Accordingly, these choice-of-forum provisions all limit the
waiver of personal jurisdiction to litigation arising under or
relating to the Deutsche Bank Agreements, which govern the
relationship between Deutsche Bank and Stanbic.

The plaintiff

may not rely on these choice-of-forum provisions to establish
personal jurisdiction in its own action.

The instant case does

not arise under or relate to the Deutsche Bank Agreements.
Moreover, the plaintiff is not a party to or a third-party
beneficiary under the Deutsche Bank Agreements and is therefore
12

unable to enforce their terms.

See Premium Mortgage Corp. v.

Equifax, Inc., 583 F.3d 103, 108 (2d Cir. 2009).
Because the plaintiff has failed to allege that Stanbic
purposefully availed itself of New York as a forum, New York’s
long-arm statute does not reach Stanbic.

The remainder of the

personal jurisdiction inquiry and other legal issues raised by
Stanbic need not be reached.

The complaint is dismissed as to

Stanbic for a lack of personal jurisdiction.
CONCLUSION
Stanbic’s February 5, 2015 motion to dismiss the complaint
is granted.
Dated:

The Clerk of Court shall close the case.

New York, New York
July 10, 2015
__________________________________
DENISE COTE
United States District Judge

13