Dorchester Fin. Sec., Inc. v. BRJ

• Decision Date: 03 July 2013
• Docket Number: Docket No. 12–770–cv.
• Citation: 722 F.3d 81
• Parties: DORCHESTER FINANCIAL SECURITIES, INC., Plaintiff–Appellant, v. BANCO BRJ, S.A., Defendant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

722 F.3d 81

DORCHESTER FINANCIAL SECURITIES, INC., Plaintiff–Appellant,

v.BANCO BRJ, S.A., Defendant–Appellee.

Docket No. 12–770–cv.

United States Court of Appeals,Second Circuit.

Argued: Jan. 30, 2013.

Decided: July 3, 2013.

T.J. Morrow, Morrow & Co., New York, NY, for Plaintiff–Appellant Dorchester Financial Securities, Incorporated.

Lyndon M. Tretter, Hogan Lovells U.S. LLP, New York, NY, for Defendant–Appellee Banco BRJ, S.A.

Before: CABRANES, WESLEY, Circuit Judges, and FURMAN, District Judge.^*

PER CURIAM:

Plaintiff–Appellant Dorchester Financial Securities, Inc. (“Dorchester”), appeals from a judgment of the United States District Court for the Southern District of New York (Kimba M. Wood, Judge ), entered on January 25, 2012, dismissing its complaint against Defendant–Appellee Banco BRJ, S.A. (“BRJ”) for lack of personal jurisdiction. We conclude that Dorchester made a prima facie showing of personal jurisdiction over BRJ, and thus carried its burden in the absence of an evidentiary hearing or trial on the merits. Accordingly, we VACATE and REMAND.

BACKGROUND

Although this suit has a long and somewhat tortured history, the facts relevant to this appeal are relatively few. Dorchester, a Florida corporation with offices in New York, initially filed suit against BRJ, a Brazilian bank, and another defendant in 2002.¹See Tretter Decl. Ex. F; id. ¶¶ 3–4. In its 2002 complaint, Dorchester alleged claims for breach of contract and fraud based on BRJ's purported failure to honor an irrevocable $250 million letter of credit. See id. ¶¶ 13–16, 27–32. When BRJ failed to answer the 2002 complaint or otherwise appear, Dorchester sought and obtained a default judgment; following an inquest, the district court entered judgment against BRJ in the amount of $112,279,452.05. Order, Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., et al. (“Dorchester”), 02 Civ. 7504 (S.D.N.Y. Nov. 25, 2003). In 2010, however, Dorchester moved to vacate the judgment under Rule 60(b)(6) of the Federal Rules of Civil Procedure after it learned that the default judgment was unenforceable in Brazil because it had not served process by letters rogatory. See Pet. to Vacate, Dorchester, 02 Civ. 7504 (S.D.N.Y. Dec. 5, 2010). On February 24, 2011, the district court granted Dorchester's motion to vacate and permitted Dorchester to file a new action. See Order, Dorchester, 02 Civ. 7504 (S.D.N.Y. Feb. 24, 2011).

On March 7, 2011, Dorchester filed a new complaint, which, on August 31, 2011, was superseded by a first amended complaint, also alleging breach of contract and fraud. Compl., Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A. (“Dorchester II”), 11 Civ. 1529 (S.D.N.Y. Mar. 7, 2011); Am. Compl., Dorchester II, 11 Civ. 1529 (S.D.N.Y. Aug. 31, 2011). Thereafter, BRJ moved to dismiss the first amended complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. In response to the motion, Dorchester proffered several bases for personal jurisdiction over BRJ. Most relevant for present purposes, Dorchester submitted as an attachment to its memorandum of law a letter agreement dated October 3, 2001, in which BRJ purportedly agreed that the letter of credit “shall be governed by ... the laws of the State of New York” and that “sufficient contacts exist with the State of New York from this transaction,” and consented to “submit to personal jurisdiction in the City and State of New York for any claim or action arising from this transaction.” Mem. Law Opp'n to Mot. to Dismiss (“Mem. Law Opp'n”), Ex. G, at 2. Dorchester also presented copies of (1) the letter of credit agreement identifying the beneficiary as Dorchester, located at “2, PENNSYLVANIA PLAZA, SUITE 1500, NEW YORK”; (2) an unauthenticated message from BRJ to Dorchester sent care of a bank in New York through the Society for Worldwide Interbank Financial Telecommunication (more commonly known as “SWIFT”), a Belgian messaging service specializing in the transmission of financial messages; and (3) a letter addressed from BRJ to Dorchester at 2 Pennsylvania Plaza, New York, New York, demanding $250,000 in exchange for the letter of credit. Mem. Law Opp'n, Exs. H, J, Q.

In support of its motion to dismiss, BRJ contended that these documents were forgeries. Specifically, through sworn declarations and supporting documentation, BRJ submitted evidence tending to show that (1) it had no record of any prior relationship with Dorchester or the company that allegedly introduced Dorchester to Banco; (2) it had never issued financial instruments of the size or nature of the purported letter of credit; (3) the signatures on the documents submitted by Dorchester were forgeries; (4) “Luis Alcazar,” who purportedly negotiated the letter of credit on BRJ's behalf, was never a BRJ employee; and (5) the unauthenticated SWIFT message was not sent by a BRJ employee. See Decl. of Luiz Augusto de Queiroz ¶¶ 3, 10, 13–15. More broadly, one of BRJ's directors affirmed that BRJ had never conducted any business in the United States, never issued a letter of credit to a United States beneficiary, and does not even issue financial instruments in English. Id. ¶¶ 5, 8, 12. BRJ also presented evidence, including court documents from Florida and California, to show that it had been the victim of other fraudulent schemes using documents much like those proffered by Dorchester. See id. Exs. A–K.

By Opinion and Order dated January 24, 2012, the district court granted BRJ's motion to dismiss for lack of personal jurisdiction. See Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., No. 11 Civ. 1529(KMW)(KNF), 2012 WL 231567 (S.D.N.Y. Jan. 24, 2012). The district court acknowledged that where “ ‘a court relies on pleadings and affidavits, rather than conducting a full-blown evidentiary hearing, the plaintiff need only make a prima facie showing that the court possesses personal jurisdiction over the defendant,’ ” and that “[a]ll pleadings and affidavits are to be construed in the light most favorable to the plaintiff.” Id. at *4 (quoting DiStefano v. Carozzi N. Am., Inc., 286 F.3d 81, 84 (2d Cir.2001)). Quoting from another Southern District of New York case, however, the district court stated that “where a ‘defendant rebuts [a] plaintiff['s] unsupported allegations with direct, highly specific testimonial evidence regarding a fact essential to jurisdiction—and [the] plaintiff[ ] do[es] not counter that evidence—the allegation may be deemed refuted.’ ” Id. (alterations in original) (quoting Merck & Co., Inc. v. Mediplan Health Consulting, Inc., 425 F.Supp.2d 402, 420 (S.D.N.Y.2006)). Applying these standards, the district court concluded that BRJ had “offered an overwhelming amount of ‘direct, highly specific testimonial evidence’ ” to show that it had no contacts with the Dorchester and the United States and that the documents submitted by Dorchester were forgeries, “none of which [evidence] Dorchester has sufficiently refuted.” Id. at *5 (quoting Merck, 425 F.Supp.2d at 420). Accordingly, the court held that it lacked personal jurisdiction over BRJ and dismissed the first amended complaint pursuant to Rule 12(b)(2). This appeal followed.²

DISCUSSION

We have long made clear that “[i]n deciding a pretrial motion to dismiss for lack of personal jurisdiction a district court has considerable procedural leeway. It may determine the motion on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion.” Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981) (citing cases). Significantly, however, the showing a plaintiff must make to defeat a defendant's claim that the court lacks personal jurisdiction over it “varies depending on the procedural posture of the litigation.” Ball v. Metallurgie Hoboken–Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990). In Ball, we explained this sliding scale as follows:

Prior to discovery, a plaintiff challenged by a jurisdiction testing motion may defeat the motion by pleading in good faith, legally sufficient allegations of jurisdiction.At that preliminary stage, the plaintiff's prima facie showing may be established solely by allegations. After discovery, the plaintiff's prima facie showing, necessary to defeat a jurisdiction testing motion, must include an averment of facts that, if credited by the trier, would suffice to establish jurisdiction over the defendant. At that point, the prima facie showing must be factually supported.

Where the jurisdictional issue is in dispute, the plaintiff's averment of jurisdictional facts will normally be met in one of three ways: (1) by a Rule 12(b)(2) motion, which assumes the truth of the plaintiff's factual allegations for purposes of the motion and challenges their sufficiency, (2) by a Rule 56 motion, which asserts that there are undisputed facts demonstrating the absence of jurisdiction, or (3) by a request for an adjudication of disputed jurisdictional facts, either at a hearing on the issue of jurisdiction or in the course of trial on the merits. If the defendant is content to challenge only the sufficiency of the plaintiff's factual allegation, in effect demurring by filing a Rule 12(b)(2) motion, the plaintiff need persuade the court only that its factual allegations constitute a prima facie showing of jurisdiction. If the defendant asserts in a Rule 56 motion that undisputed facts show the absence of jurisdiction, the court proceeds, as with any summary judgment motion, to determine if undisputed facts exist that warrant the relief sought. If the defendant contests the plaintiff's factual allegations, then a hearing is required, at which the plaintiff must prove the existence of jurisdiction by a preponderance of the evidence.

Id. (citations omitted); accord S. New Eng. Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 138 (2d Cir.2010); Commercial Union Ins. Co. v. Alitalia Airlines, S.p.A., 347 F.3d 448,...