Federal Deposit Ins. Corp. v. British-American Ins. Co., Ltd.

Decision Date29 September 1987
Docket NumberNo. 86-6639,BRITISH-AMERICAN,86-6639
Citation828 F.2d 1439
PartiesFEDERAL DEPOSIT INSURANCE CORPORATION, as receiver of the Western National Bank of Lovell, Wyoming, Plaintiff-Appellant, v.INSURANCE COMPANY, LTD., Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

E. Whitney Drake, Washington, D.C., and Marshall G. Mintz, Los Angeles, Cal., for plaintiff-appellant.

John P. McKay, Los Angeles, Cal., for defendant-appellee.

Appeal from the United States District Court for the Central District of California.

Before NELSON, HALL and THOMPSON, Circuit Judges.

NELSON, Circuit Judge:

The Federal Deposit Insurance Corporation ("FDIC") appeals the district court's dismissal of its action against the British-American Insurance Company ("BAIC") for lack of personal jurisdiction. FDIC initiated this action as the receiver of Western National Bank to recover $2 million of the bank's funds that were allegedly fraudulently transferred to BAIC for the purchase of its Fiji branch. We note jurisdiction under 28 U.S.C. Sec. 1291 (1982) and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

The parties agree that the facts are essentially undisputed. Milton Polland, a resident of Los Angeles, California, was a representative of Anant Kumar Tripati and his corporation, the Fort Lincoln Companies. Sometime prior to May 1983, Polland called David Thurlow, General Manager of BAIC's home office in Nassau, Bahama Islands, to solicit the purchase of BAIC's Fiji branch. Polland and Thurlow communicated via telephone and letter between Nassau and Los Angeles, and Polland eventually After BAIC and Polland reached an agreement, BAIC executed the contract in Nassau, and sent it by mail to Polland in Los Angeles for execution. The contract included provisions stating that the contract would be governed by Fiji law, that notices would be sent to Polland in Los Angeles, and that the "Place of Completion" would be Nassau. The contract also indicated that Polland had to obtain all government approvals from the Dominion of Fiji necessary to consummate the lawful transfer of the Fiji branch office. In addition, Polland had to form a new Fiji company, Southwest Pacific Assurance Co., Ltd. ("Southwest"), for the purpose of acquiring and operating BAIC's Fiji office. The agreed purchase price was $2 million.

flew to Malaysia and met with Thurlow to negotiate the terms of the contract.

On May 2 and 3, 1983, Justin Tierney, a vice president of one of BAIC's subsidiaries, was in Los Angeles on an unrelated matter. He had no prior knowledge or involvement in the sale agreement. George Ragsdale, BAIC's counsel in North Carolina, called Tierney in Los Angeles, and asked him to stay a few days in order to pick up the $2 million cashier's check from Polland. Polland signed the contract in Los Angeles and used funds from a Fort Lincoln Companies' account to obtain the cashier's check, which was drawn on Imperial Bank in Los Angeles. On May 5, 1983, after Polland delivered the check to Tierney, Tierney endorsed the check, went to the Bank of America branch near the Los Angeles airport, and requested the bank to wire-transfer the money to BAIC via the Bank of America in the Bahamas.

Polland never obtained proper approval from the Fiji government prior to the transfer, and BAIC neglected to give notice of the transfer to the Fiji Commissioner of Insurance until the end of May 1983. During that period, the Federal Bureau of Investigation began to investigate Tripati, an officer of Southwest, for alleged embezzlement and wire fraud. On December 7, 1983, the Fiji Commissioner of Insurance informed BAIC that the transfer to Polland was not approved and that the Commissioner had seized control of the Fiji branch. FDIC, as the receiver of the insolvent Western National Bank of Lovell, Wyoming (the source of Fort Lincoln Companies' funds), and as judgment creditor of Tripati and the Fort Lincoln Companies, initiated an action against BAIC to set aside the allegedly fraudulent conveyance of the Fiji branch for $2 million. On October 20, 1986, the district court dismissed the action for lack of personal jurisdiction over BAIC. FDIC timely appealed.

ISSUE PRESENTED

Whether the district court erred in dismissing the action for lack of personal jurisdiction.

DISCUSSION
I. STANDARD OF REVIEW

The district court's determination whether personal jurisdiction can be exercised is a question of law, reviewable de novo when the underlying facts are undisputed. Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 1392, 1396 (9th Cir.1986). The plaintiff bears the burden of establishing that the court has personal jurisdiction. Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299, 301 (9th Cir.1986).

II. ANALYSIS

In order to establish personal jurisdiction over BAIC, a nonresident defendant, FDIC must show that the forum state's jurisdictional statute confers personal jurisdiction over BAIC, and that the exercise of jurisdiction accords with federal constitutional principles of due process. Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir.1987). Because the California statute extends jurisdiction to the maximum extent permitted by due process, Cal.Civ.Proc.Code Sec. 410.10 (West 1973), the jurisdictional inquiries under the state statute and due process principles can be conducted as one analysis. Pacific Atl. Trading Co. v. M/V Main Express, 758 F.2d 1325, 1327 (9th Cir.1985). Due process requires that nonresident defendants have certain minimum Courts may exercise either general or specific personal jurisdiction over nonresident defendants. Fields, 796 F.2d at 301. General jurisdiction exists when the nonresident has " 'substantial' or 'continuous and systematic' contacts with the forum state." Id. (quoting Haisten, 784 F.2d at 1396). Since FDIC does not contend that the court has general jurisdiction over BAIC, the district court's order should be reviewed to determine whether FDIC established specific (i.e., limited) jurisdiction.

                contacts with the forum so that maintenance of a suit does not offend traditional notions of fair play and substantial justice.   International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945)
                

This circuit has established a three-part test for analyzing whether specific jurisdiction may be exercised:

(1) the nonresident defendant must purposefully direct his activities or consummate some transaction with the forum or residents 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.

Lake, 817 F.2d at 1421 (citations omitted); see also Corporate Inv. Business Brokers v. Melcher, 824 F.2d 786, 789 (9th Cir.1987). Because we find that the exercise of personal jurisdiction over BAIC is unreasonable, we need not determine whether the first two prongs of the test are satisfied. Fields, 796 F.2d at 302; Insurance Co. of N. Am. v. Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir.1981); Rocke v. Canadian Automobile Sport Club, 660 F.2d 395, 399 (9th Cir.1981); see also Asahi Metal Indus. Co. v. Superior Court, --- U.S. ----, 107 S.Ct. 1026, 1033, 94 L.Ed.2d 92 (1987) (Stevens, J., concurring) (noting that a finding of unreasonableness is a sufficient basis for defeating the assertion of personal jurisdiction); cf. Corporate Inv. Business Brokers, 824 F.2d at 788-91.

Jurisdiction may be exercised reasonably if " 'under the totality of the circumstances the defendant could reasonably anticipate being called upon to present a defense in a distant forum.' " Olsen by Sheldon v. Government of Mexico, 729 F.2d 641, 649 (9th Cir.) (quoting Taubler v. Giraud, 655 F.2d 991, 993 (9th Cir.1981)), cert. denied, 469 U.S. 917, 105 S.Ct. 295, 83 L.Ed.2d 230 (1984). This circuit has identified seven relevant factors in determining the reasonableness of asserting jurisdiction over a nonresident defendant:

(1) The extent of purposeful interjection into the forum state;

(2) The burden on the defendant of defending in the forum;

(3) The extent of conflict with the sovereignty of defendant's state;

(4) The forum state's interest in adjudicating the dispute;

(5) The most efficient judicial resolution of the controversy;

(6) The importance of the forum to plaintiff's interest in convenient and effective relief;

(7) The existence of an alternative forum.

Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 840 (9th Cir.1986); Lake, 817 F.2d at 1421-22; Corporate Inv. Business Brokers, 824 F.2d at 790. Each factor will be analyzed below and balanced into the reasonableness inquiry.

1. Purposeful Interjection

The district court concluded that Tierney performed the "ministerial act of an employee used as a delivery person" during his visit to Los Angeles and that this was insufficient to establish purposeful direction of BAIC's business activities toward California. We agree. Polland, not BAIC, directly solicited the sale of the Fiji branch by calling the Nassau office; the contract negotiations were conducted in Malaysia; and Fiji law was designated as the governing law. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 482, 105 S.Ct. 2174, 2187, 85 L.Ed.2d 528 (1985) (noting It is clear that a contract alone is not sufficient to establish purposeful interjection into a forum state. See Burger King Corp., 471 U.S. at 478-79, 105 S.Ct. at 2185; Hirsch v. Blue Cross, Blue Shield, 800 F.2d 1474, 1480 n. 3 (9th Cir.1986). The negotiations and contemplated future consequences of the contract (i.e., whether continuing contacts with California were envisioned) must be considered in analyzing BAIC's purposeful interjection...

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