Martin v. First Interstate Bank of California

• Decision Date: 17 April 1995
• Docket Number: No. CIV 94-270 MV/DJS.,CIV 94-270 MV/DJS.
• Citation: 914 F. Supp. 473
• Parties: Donald D. MARTIN, Willa H. Martin, Daniel E. Boyle, Jr., Patricia A. Boyle and Cynthia K. Norris, f/k/a Cynthia K. Boyle, Plaintiffs, v. FIRST INTERSTATE BANK OF CALIFORNIA, Bank Julius Baer & Co., Ltd., and Standard Chartered Bank, Defendants.
• Court: U.S. District Court — District of New Mexico

914 F. Supp. 473

Donald D. MARTIN, Willa H. Martin, Daniel E. Boyle, Jr., Patricia A. Boyle and Cynthia K. Norris, f/k/a Cynthia K. Boyle, Plaintiffs, v. FIRST INTERSTATE BANK OF CALIFORNIA, Bank Julius Baer & Co., Ltd., and Standard Chartered Bank, Defendants.

No. CIV 94-270 MV/DJS.

United States District Court, D. New Mexico.

April 17, 1995.

Bill Chappell Jr., Montgomery & Andrews, P.A., Albuquerque, New Mexico, for plaintiffs.

John M. Kulikowski, William D. Slease, Keleher & McLeod, P.A., Albuquerque, New Mexico, for defendants.

MEMORANDUM OPINION AND ORDER

VAZQUEZ, District Judge.

THIS MATTER comes before the Court on Defendants, First Interstate Bank of California and Standard Chartered Bank's, Motion to Dismiss for Lack of Personal Jurisdiction, filed March 25, 1994. The Court has reviewed the briefs, the affidavits submitted therewith and the relevant law, and being fully advised finds the Defendants' Motion to dismiss is well taken and is granted.

FACTUAL SUMMARY

The following facts are derived from the pleadings. This is an action for injunctive relief. The Plaintiffs seek to enjoin the defendant banks from disbursing funds under letters of credit issued by First Interstate Bank of California (FIBC). In 1990, the Plaintiffs invested in the Society and Council of Lloyd's, commonly known as Lloyd's of London (Lloyd's) and became "Names." Names are members of insurance syndicates which make up Lloyd's. Each syndicate assumes insurance risks and receives premium income. Profits from the syndicates were to be distributed to the Names, and the Names were to be liable for losses suffered by those syndicates of which they were members, pro rata, on the basis of each Name's underwriting limit.

As security on the investment, Plaintiffs were required to provide letters of credit, naming Lloyd's as the beneficiary. First Interstate Bank of Albuquerque (FIABQ), which is now United New Mexico Bank (United)¹ assisted the Plaintiffs in obtaining letters of credit from FIBC, because Lloyd's would not accept letters of credit from FIABQ. FIABQ handled initial transactions, conducted credit reviews and co-signed the Plaintiffs' applications for the letters of credit from FIBC.

FIBC is a federal bank, organized under California law, with its principal place of business in California. FIBC issued the letters of credit to Lloyd's, payable through its London office. Allegedly, certain rights or obligations under the letters of credit were assigned or transferred to SCB. SCB is a bank duly organized and existing under the laws of England. SCB has its principal place of business in London, England and its principal office in the United States in New York, New York.

Plaintiffs seek to enjoin FIBC and SCB, if it has in fact been assigned any interests in the letters of credit, from disbursing on the letters of credit should a draw request be made by the named beneficiary, Lloyd's. Defendants FIBC and SCB contend that the Court lacks personal jurisdiction over them and moves to dismiss this action.

DISCUSSION

This Court may exercise personal jurisdiction over the out-of-state defendants in this action, if the plaintiffs establish that the defendants are subject to jurisdiction under New Mexico's long-arm statute and sufficient minimum contacts exist so that the exercise of jurisdiction does not offend the due process clause of the fourteenth amendment. See Beh v. Ostergard, 657 F.Supp. 173 (D.N.M.1987) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945).

Specifically, New Mexico law provides for in personam jurisdiction over nonresident defendants, if the defendants have committed one of the acts enumerated in the long arm statute; the cause of action arises from those acts; and the defendants have sufficient minimum contacts with this state sufficient to satisfy the requirements of constitutional due process. Beh, 657 F.Supp. at 174; Sanchez v. Church of Scientology of Orange County, 115 N.M. 660, 857 P.2d 771, 773 (1993).

Plaintiffs bear the burden of proving facts that support the Court's exercise of jurisdiction. See Doe v. National Medical Servs., 974 F.2d 143, 145 (10th Cir.1992). However, prior to trial, only a prima facie showing that personal jurisdiction exists need be made. Behagen v. Amateur Basketball Ass'n., 744 F.2d 731, 733 (10th Cir.1984), cert. denied, 471 U.S. 1010, 105 S.Ct. 1879, 85 L.Ed.2d 171 (1985). In considering this preliminary jurisdictional showing, the allegations in the Plaintiffs' complaint are taken as true unless they are contradicted by affidavits. Id. If conflicting affidavits are presented, all factual disputes are resolved in the Plaintiffs' favor. Id.

A. New Mexico's Long Arm Statute.

The New Mexico long arm statute sets out five different acts, which if performed in our state, submit the actor to the jurisdiction of our courts, if those acts give rise to the cause of action. NMSA 1978 § 38-1-16 (Michie 1987). Transacting business within the state is one of these acts. Id.² Plaintiffs allege that SCB and FIBC transacted business in this state and, therefore, are subject to this Court's jurisdiction under New Mexico's long arm statute.

I. Standard Chartered Bank (SCB).

Plaintiffs allege SCB has "transacted business or undertaken other acts" in this state, subjecting it to this Court's jurisdiction. Plaintiff has failed to support this conclusory allegation with any factual basis or affidavits to support it.³ Defendant SCB, on the other hand, submitted an affidavit by Michael Shields, an authorized representative of SCB, declaring that SCB is not authorized to transact business in New Mexico; has never maintained any office, agency, branch or facility of any type in this state; and did not commit acts in this state that are in any way related to the letters of credit at issue in this lawsuit. Shields acknowledged that SCB has interests in certain real estate located in New Mexico, but explained that it did not purposefully seek out these interests, but rather they were acquired indirectly through certain asset transfers between SCB and its subsidiaries. In any event, ownership of a real estate interest in this state, by itself, is not one of the enumerated acts in the long arm statute, and no connection has been alleged between any real estate interest and the instant cause of action.

Defendant SCB has contradicted the allegations pertaining to jurisdiction in Plaintiffs' complaint and Plaintiffs have not submitted any conflicting affidavits. Thus, Plaintiffs have failed to make even a threshold showing of a basis for personal jurisdiction over SCB. Therefore, Defendant SCB is dismissed from this lawsuit.

II. First Interstate Bank of California (FIBC).

Plaintiffs assert in their pleadings and by affidavits of William Wood, Senior Vice President of United New Mexico Bank, and Brint R. Clay, Vice President of Sunwest Bank, formerly employed by FIABQ, that Defendant FIBC transacted business in this state related to its issuance of the letters of credit, in the following ways: (1) by entering into loan agreements (letters of credit) with New Mexico residents and a New Mexico bank; (2) by making phone calls and mailing documents to New Mexico residents; (3) by receiving an issuance fee and an annual renewal fee for the letters of credit; and (4) because Plaintiffs signed the applications for the letters of credit in New Mexico.

Defendant FIBC, on the other hand, submitted affidavits by David Grimes, Vice President of FIBC and James Cline, former officer of FIBC, which provide that FIBC does not maintain offices, agencies, branches or other facilities in New Mexico; has never sought or obtained a certificate of authority to do business in New Mexico; did not issue the letters of credit in New Mexico, nor authorize the letters of credit to be drawn upon in this state and at no time sent representatives to New Mexico to negotiate with Plaintiffs regarding the letters of credit.

Plaintiffs also allege that FIBC committed a number of other acts in New Mexico subjecting them to this Court's jurisdiction.⁴ However, those acts which are not enumerated in the long arm statute or which have no relation to the instant cause of action were not considered by this Court in its analysis. See Beh, 657 F.Supp. at 175 n. 1. While many of these "other acts" might help establish that FIBC transacted business in this state in general, Plaintiffs failed to establish any nexus between those acts and the underlying cause of action as required under the long arm statute (§ 38-1-16(C)).

New Mexico has interpreted the long arm statute as extending personal jurisdiction as far as constitutionally permissible. United Nuclear Corp. v. General Atomic Co., 91 N.M. 41, 570 P.2d 305, 306 (1977). Thus, it is not necessary to determine whether the Defendants transacted business within New Mexico in any technical sense. See Federal Deposit Insurance Corp. v. Hiatt, 117 N.M. 461, 872 P.2d 879, 881 (1994). In Hiatt, the court stated:

When the state courts have construed the state long-arm statute as being coextensive with the requirements of due process, "the usual two-step analysis collapses into a single search for the outer limits of what due process permits."

Id. (quoting Forsythe v. Overmyer, 576 F.2d 779, 782 (9th Cir.) cert. denied, 439 U.S. 864, 99 S.Ct. 188, 58 L.Ed.2d 174 (1978)).

B. Constitutional test for personal jurisdiction: Due process.

The general constitutional test for personal jurisdiction is well-established. A federal court sitting in diversity "may exercise personal jurisdiction over a nonresident defendant only so long as there exist `minimum contacts' between the defendant and the forum state." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980) (quoting International Shoe, 326 U.S. at 316, 66 S.Ct. at 158); See also Customwood Mfg., Inc. v. Downey Const. Co., 102 N.M. 56, 691...