Licci v. Am. Express Bank Ltd

• Decision Date: 31 March 2010
• Docket Number: No. 08 CV 7253(GBD).,08 CV 7253(GBD).
• Citation: 704 F.Supp.2d 403
• Parties: Yaakov LICCI, a minor, by his father and natural guardian Elihav Licci and by, his mother and natural guardian Yehudit Licci, et al., Plaintiffs,v.AMERICAN EXPRESS BANK LTD., and Lebanese Canadian Bank, Sal, Defendants.
• Court: U.S. District Court — Southern District of New York

704 F.Supp.2d 403

Yaakov LICCI, a minor, by his father and natural guardian Elihav Licci and by, his mother and natural guardian Yehudit Licci, et al., Plaintiffs,v.AMERICAN EXPRESS BANK LTD., and Lebanese Canadian Bank, Sal, Defendants.

No. 08 CV 7253(GBD).

United States District Court S.D. New York.

March 31, 2010.

Robert Joseph Tolchin, Robert J. Tolchin, Esq., David Jaroslawicz, Jaroslawicz & Jaros, LLC, New York, NY, for Plaintiffs.

Allison Galena Schnieders, Mark Paul Ladner, Morrison & Foerster LLP, Mark David McPherson, Michael Gerard, Jonathan Dick Siegfried, Lawrence Steven Hirsh, Dewey & Lebouef, LLP, New York, NY, for Defendants.

MEMORANDUM DECISION AND ORDER

GEORGE B. DANIELS, District Judge:

Defendants, American Express Bank Ltd. (“Amex Bank”) and the Lebanese Canadian Bank, S.A.L. (“LCB”), have each moved to dismiss the amended complaint, pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted. Defendant LCB also seeks dismissal, pursuant to Fed.R.Civ.P. 12(b) (2), for lack of personal jurisdiction. The defendants' respective motions are both granted.

Plaintiffs commenced this action “under the Antiterrorism Act, 18 U.S.C. § 2331 et seq., the Alien Tort Claims Act, 28 U.S.C. § 1350 and causes of action in tort under Israeli law, arising from a series of terrorist rocket attacks on civilians in Israel carried out by the Hizbollah terrorist organization during July and August 2006.” (Am. Compl. ¶ 1). Plaintiffs are American Israeli and Canadian civilians who were themselves injured and whose family members were killed in those attacks. The gravamen of the amended complaint is the allegation that the defendant-banking institutions intentionally and/or negligently provided Hizbollah with wire transfer services involving millions of dollars, and such transferred funds enabled and assisted Hizbollah to carry out terrorist attacks, including the rocket attacks that harmed plaintiffs.

Plaintiffs allege that, because defendant LCB is a Lebanese bank, it must utilize the services of a correspondent bank in the United States to carry out United States dollar transactions.¹ Defendant Amex Bank, a Connecticut banking corporation with New York headquarters, allegedly acts as LCB's correspondent bank. Plaintiffs allege that several bank accounts in the name of the Shahid (Martyrs) Foundation (hereinafter “Shahid”) were maintained at LCB branches in Lebanon. Plaintiffs further allege that, between 2004 and July 12, 2006, defendants effectuated dozens of dollar wire transfers to, from and/or between those accounts, totaling several million dollars. Plaintiffs claim that the wire transfer banking services provided by defendants were carried out in and through New York via Amex Bank, acting as LCB's correspondent bank.

The amended complaint alleges that, for several years prior to July 12, 2006, defendants had actual knowledge that (1) “Shahid is an integral part of Hizbollah and constitutes part of Hizbollah's financial arm”; (2) the bank accounts in Shahid's name “and the funds therein were owned and controlled by Hizbollah”; and (3) the wire transfers to and from the Shahid-entitled accounts “were being carried out by and at the direction of Hizbollah”. ( Id. ¶ ¶ 135, 149). Plaintiffs impute such knowledge to defendants based on the allegation that “the fact that Shahid is part of Hizbollah's financial arm was notorious public knowledge during the period between 2004 and July 12, 2006.” ( Id.). Although Shahid's relationship to Hizbollah was allegedly notorious public knowledge since 2004, plaintiffs do not claim that, at the time of the 2006 missile attacks or any time prior thereto, Shahid had been designated as a terrorist organization by the United States Government. Plaintiffs emphasize, however, that years prior to the attacks, defendants had actual knowledge of Hizbollah's terrorist agenda “because Hizbollah had been designated by the United States Government as a Specially Designated Terrorist [ ] continuously since 1995, as a Foreign Terrorist Organization [ ] continuously since 1997, and as Specially Designated Global Terrorist continuously since 2001.” ( Id. ¶ 32). Plaintiffs do not claim that Shahid was referenced, or otherwise included, in the United States Government's terrorist designations of Hizbollah. Plaintiffs allege that the wire transfers, purportedly carried out by defendants on Hizbollah's behalf, “substantially increased and facilitated Hizbollah's ability to plan, to prepare for and to carry out rocket attacks on civilians, including the” rocket attacks causing the physical injuries and death for which plaintiffs seek compensation. ( Id. ¶ 116).

The amended complaint pleads a single cause of action against Amex Bank for negligence under Israeli law. Plaintiffs allege that, in purportedly executing the wire transfers, Amex Bank failed to comply with applicable banking laws and regulations to know its customers, and to monitor, report and refuse to execute suspicious and/or irregular banking transactions. The remaining causes of action are asserted against defendant LCB, for: (1) international terrorism pursuant to 18 U.S.C. § 2333; (2) aiding and abetting international terrorism pursuant to 18 U.S.C. § 2333; (3) aiding and abetting violations of international law; (4) negligence under Israeli law; and (5) breach of statutory duty under Israeli Law.

LACK OF PERSONAL JURISDICTION

Defendant LCB seeks dismissal of the amended complaint for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2). To withstand a 12(b)(2) motion, plaintiffs bear the burden of showing that the Court has jurisdiction over the defendant. In re Magnetic Audiotape Antitrust Litig., 334 F.3d 204, 206 (2d Cir.2003); Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.1996). Where, as here, no evidentiary hearing has been held, nor have the parties engaged in jurisdictional discovery, plaintiffs need only make a prima facie showing that jurisdiction exists. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990); Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir.1985). Such a showing may be demonstrated on the basis of legally sufficient allegations of jurisdiction alone. In re Magnetic Audiotape, 334 F.3d at 206. The Court is to accept all averments of jurisdictional facts as true, and construe the pleadings and affidavits in plaintiffs' favor. See, Id.; PDK Labs. Inc. v. Friedlander, 103 F.3d 1105, 1108 (2d Cir.1997).

Service of process, or the waiver thereof, establishes personal jurisdiction over a non-domiciliary who is subject to jurisdiction under the laws of the state in which the district court is located. Fed.R.Civ.P. 4(k)(1)(A). Thus, this Court must initially determine whether New York state law provides a basis to assert personal jurisdiction over LCB, and if so, must then determine whether the exercise of jurisdiction would comport with constitutional principles of due process. See, Saudi v. Marine Atlantic, Ltd., 306 Fed.Appx. 653, 654 (2d Cir.2009) ( citing Best Van Lines. Inc. v. Walker, 490 F.3d 239, 243-44 (2d Cir.2007)).

Plaintiffs argue that LCB is subject to long arm jurisdiction, under New York Civil Procedure Law § 302(a)(1), as a result of its alleged use of defendant Amex Bank as its correspondent bank to carry out wire transfers of funds to and from the Shahid-entitled bank accounts. “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.” Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 103 (2d Cir.2006). A cause of action is deemed to have “arisen from” defendant's business transaction in New York, when “there is an articulable nexus, or a substantial relationship, between the claim asserted and the actions that occurred in New York.” Best Van, 490 F.3d at 246 (internal quotation marks omitted) ( quoting Henderson v. INS, 157 F.3d 106, 123 (2d Cir.1998)). Where the relationship between the claim and the transaction is too attenuated or their connection is merely coincidental jurisdiction will be lacking. See, Sole Resort, 450 F.3d at 103; Johnson v. Ward, 4 N.Y.3d 516, 797 N.Y.S.2d 33, 829 N.E.2d 1201, 1203 (2005).

The mere maintenance of correspondent bank account with a financial institution in New York is not, standing alone, a sufficient basis to subject a foreign defendant to personal jurisdiction under § 302(a)(1). See, Tamam v. Fransabank SAL, 677 F.Supp.2d 720, 727 (S.D.N.Y.2010) (“courts in this district have routinely held that merely maintaining a New York correspondent bank account is insufficient to subject a foreign bank to personal jurisdiction”); Daventree Ltd. v. Republic of Azerbaijan, 349 F.Supp.2d 736, 762 (S.D.N.Y.2004) (maintenance of correspondent account through which racketeering monies were transferred held insufficient for jurisdiction under CPLR 302(a)(1)); Leema Enters., Inc. v. Willi, 575 F.Supp. 1533, 1537 (S.D.N.Y.1983) (“mere maintenance of correspondent bank accounts to facilitate international financial transactions or money transfers ... is not enough to confer this court with personal jurisdiction over the defendant, especially [since] ... the accounts are unrelated to the fraud alleged.”).

However, where the culpable conduct, at the heart of plaintiffs lawsuit, is the foreign bank's improper use of a New York correspondent account, jurisdiction may be exercised under § 302(a)(1). See e.g., Dale v. Banque SCS Alliance S.A., 2005 WL 2347853, at *3 (S.D.N.Y. Sept. 22, 2005) (allegations that foreign bank used its correspondent accounts to effect the fraudulent wire transfers that were themselves the subject of the lawsuit held sufficient to establish § 302(a)(1) jurisdiction); Correspondent Servs. Corp. v. J.V.W. Invs., Ltd., 2000 WL 1718785, at *3 (...