Oriental Imports and Exports, Inc. v. Maduro & Curiel's Bank, N.V.

Decision Date28 March 1983
Docket NumberNo. 81-5717,81-5717
PartiesORIENTAL IMPORTS AND EXPORTS, INC., a Florida corporation, Plaintiff-Appellee, Cross-Appellant, v. MADURO & CURIEL'S BANK, N.V. a foreign banking corporation, Defendant-Appellant, Cross-Appellee.
CourtU.S. Court of Appeals — Eleventh Circuit

Peters, Pickle, Flynn, Niemoeller, Stieglitz & Downs, Nancy Schleifer, Miami, Fla., for defendant-appellant, cross-appellee.

Arnold R. Ginsberg, Miami, Fla., for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Southern District of Florida.

Before RONEY and JOHNSON, Circuit Judges, and DYER, Senior Circuit Judge.

RONEY, Circuit Judge:

In a case of first impression in this Court, we hold that a foreign banking corporation engaged in the normal activity with resident correspondent banks to facilitate the movement of money is not subject to long-arm jurisdiction in Florida, even though it makes certain passive investments in federal funds. We therefore reverse a money judgment against it.

This is a diversity case. Plaintiff Oriental Imports and Exports, a Florida corporation, sold garments to a purchaser in the Netherlands Antilles. When it did not receive payment for the goods, it sued Maduro & Curiel's Bank, a Netherlands Antilles bank which maintains correspondent bank accounts in Miami, Florida, on the ground that Maduro & Curiel's Bank wrongfully delivered title documents to the purchaser without payment. Finding jurisdiction under the long-arm statute, the district court held the defendant negligent in the handling of this commercial collection item and rendered judgment for $21,104.24. The court denied punitive damages on the ground that the plaintiff had not demonstrated malicious or wanton conduct. The bank appeals the findings of jurisdiction and negligence. The plaintiff cross-appeals the denial of punitive damages. Since the district court was without in personam jurisdiction, we do not reach the merits of the negligence issue or the cross-appeal.

The facts that control the jurisdictional issue are not in dispute. Maduro & Curiel's Bank is a Netherlands Antilles bank which acts as a correspondent bank for various Miami banks. It received sale documents from Flagship Bank of Miami, along with a sight draft and an airway bill for goods sold by plaintiff. Prior to that, the president of Oriental Imports had gone to Curacao in the Netherlands Antilles and obtained an order from Jose Faerman & Company, a Netherlands Antilles corporation. Oriental Imports had then delivered certain sale documents (invoices, packing lists and a letter of authority) to Flagship Bank which forwarded them to defendant for delivery to the purchaser Jose Faerman & Company upon receipt of payment for the goods. If the transaction had gone as planned, the customer would have made payment to Maduro & Curiel's Bank, which would have notified its correspondent bank in Miami. The Miami bank would have then debited Maduro & Curiel's account and credited the seller's account. Although some facts are disputed, it is clear that Jose Faerman & Company eventually received possession of the goods, and that no payment was ever made to Oriental Imports and Exports.

The law is clear that a federal court in a diversity action may exercise personal jurisdiction over a nonresident defendant only to the extent permitted by the long-arm statute of the forum state. Rubaii v. Lakewood Pipe of Texas, Inc., 695 F.2d 541 (11th Cir.1983); Gold Kist, Inc. v. Baskin-Robbins Ice Cream Co., 623 F.2d 375, 377 (5th Cir.1980). Because the reach of the Florida long-arm statute is a question of Florida state law, federal courts are required to construe it as would the Florida Supreme Court. See Moore v. Lindsey, 662 F.2d 354, 357-58 (5th Cir. Unit B 1981); Jetco Electronic Industries, Inc. v. Gardiner, 473 F.2d 1228, 1232 (5th Cir.1973). The Florida long-arm statute is strictly construed, and the person invoking jurisdiction under it has the burden of proving facts which clearly justify the use of this method of service of process. Bank of Wessington v. Winters Government Securities Corporation, 361 So.2d 757, 759 (Fla.Dist.Ct.App.1978); Elmex Corp. v. Atlantic Federal Savings and Loan Association, 325 So.2d 58, 61 (Fla.Dist.Ct.App.1976).

Since the defendant has no office or agency in this state, the key portions of the Florida long-arm statute require that the defendant "engage in" or "carry on" a business or business venture in the state, commit a tortious act in the state, or engage in solicitation or service activities within the state. 1

Plaintiff argues that first, the normal activities of a foreign correspondent bank constitute doing business in Florida and second, in addition to such activities, the bank here had investments in the United States which either alone, or coupled with its correspondent bank activities, constitute doing business and third, in any event, the defendant committed a tort within the state and is subject to jurisdiction under that section of the Florida statute.

We first examine whether the bank was "doing business" in Florida through its correspondent bank accounts in Miami. Here we are focusing on the normal activities that would probably be carried on by any correspondent bank. A representative of Citizens & Southern International Bank testified that correspondent accounts facilitate the transfer of funds incidental to the conduct of international trade between citizens of different countries. Maduro & Curiel's Bank has its principal place of business in Curacao. It has no offices, agents, personnel or property in Florida. It is not licensed to do business in Florida, and has no agent to accept service of process in Florida. It maintains correspondent bank accounts with Miami banks, including Southeast First National Bank and Citizens & Southern International Bank of Miami. Plaintiff introduced evidence that Maduro & Curiel's Bank had passed at least $150,000,000 through these accounts in deposits and withdrawals. This was essentially money of its customers. The transactions with the Miami banks were handled by mail or courier.

Although there appears to be no Florida authority directly on point, courts in other jurisdictions have held that the maintenance of a correspondent banking relationship alone is not sufficient to confer personal jurisdiction over a foreign bank. See Faravelli v. Bankers Trust Co., 85 A.D.2d 335, 447 N.Y.S.2d 962, 964-65 (N.Y.App.Div.1982); Nemetsky v. Banque de Developpement de la Republique du Niger, 64 A.D.2d 694, 407 N.Y.S.2d 556 (N.Y.App.Div.1978), aff'd, 48 N.Y.2d 962, 425 N.Y.S.2d 277, 401 N.E.2d 388 (N.Y.1979); Amigo Foods Corp. v. Marine Midland Bank--New York, 39 N.Y.2d 391, 384 N.Y.S.2d 124, 127, 348 N.E.2d 581 (N.Y.1976). In E.I.C., Inc. v. Bank of Virginia, 108 Cal.App.3d 148, 166 Cal.Rptr. 317 (Cal.App.1980), the California court held that it lacked jurisdiction over a Virginia bank which maintained balances and had a correspondent banking relationship with two California banks. Although the California statute allowed the court to "exercise jurisdiction on any basis not inconsistent with the Constitution of California or of the United States," the court concluded that the correspondent bank relationship did not provide the requisite "minimum contacts" with California to satisfy the due process clause:

[M]ost banks of any size maintain correspondents in all major regions of the country and in selected areas overseas. It would be a distortion of due process to hold that a state acquires general personal jurisdiction over an out-of-state bank (as opposed to in rem jurisdiction) merely because the bank has a correspondent relationship with a bank within the state and a balance on deposit with its correspondent bank.

166 Cal.Rptr. at 320, citing Bank of America v. Whitney National Bank, 261 U.S. 171, 173, 43 S.Ct. 311, 312, 67 L.Ed. 594 (1922). In Whitney, decided before the "minimum contacts" standard of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and without reference to a long-arm statute, the Supreme Court held that a Louisiana bank which maintained six correspondent bank accounts in New York had no "presence" in New York for jurisdictional purposes, and therefore could not be sued in New York.

A Florida case suggests the fact that Miami banks were holding the funds of Maduro & Curiel's Bank in Florida would not be sufficient for long-arm jurisdiction. In April Industries, Inc. v. Levy, 411 So.2d 303 (Fla.Dist.Ct.App.1982), parties outside of Florida entered into a stock purchase agreement which included an escrow agreement whereby a Miami attorney would hold certain notes in Florida. When the escrowee was sued in Florida, the court held that the presence of the corporation's personal property in Florida pursuant to an escrow agreement entered outside of Florida, and the control of that property by a Florida escrowee, were insufficient contacts to find that the corporation conducted business or had an agency in Florida for the purposes of the long-arm statute.

The reasoning of these cases seems sound. We are persuaded that the Florida long-arm statute, which confers jurisdiction over a nonresident defendant who "operates, conducts, engages in or carries on a business" in Florida, would not be interpreted to permit personal jurisdiction solely on the basis of foreign bank's correspondent relationship with a Florida bank.

The fact that Maduro & Curiel's Bank maintained large balances in its Miami accounts, or transferred large amounts of money through these accounts, does not alter this analysis. The inquiry whether a nonresident is conducting business in Florida concerns the nature, not the extent, of the nonresident's activities in Florida. McLean v. Church of Scientology, 538 F.Supp. 545, 549 (M.D.Fla.1982). The requirement that the defendant have a connection with the forum state substantial...

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