Statek Corp. v. Coudert Bros. LLP

STATEK CORP., Plaintiff, v. COUDERT BROS. LLP, Defendant.

No. 3:07-cv-00456 (SRU)

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT

February 12, 2018

RULING ON MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Plaintiff Statek Corp. ("Statek")—a California corporation with principal place of business in Orange, California—sued its erstwhile law firm, Coudert Bros. LLP ("Coudert")—a New York limited liability partnership—for malpractice under English law. Statek's claim arises out of Coudert's alleged failure to transfer certain files from Coudert's London office to Statek in 1996. Coudert has moved to dismiss for lack of personal jurisdiction. Because jurisdiction over Coudert is not authorized by Connecticut's long-arm statute and would not comport with the requirements of due process, I grant Coudert's motion to dismiss.

I. Standard of Review

For a federal court to exercise personal jurisdiction over a defendant, "three requirements must be met." Waldman v. Palestine Liberation Org., 835 F.3d 317, 327 (2d Cir. 2016). First, "the plaintiff's service of process upon the defendant must have been procedurally proper." Id. Second, "there must be a statutory basis for personal jurisdiction." Id. And third, "the exercise of personal jurisdiction must comport with constitutional due process principles." Id. The due process test, in turn, has two components: the "minimum contacts" element "requires that the court determine whether a defendant has sufficient minimum contacts with the forum to justify the court's exercise of personal jurisdiction over the defendant." Id. (citing Daimler AG v. Bauman, 571 U.S. ___, 134 S. Ct. 746, 754 (2014)), and the "reasonableness" element "requires the court to determine whether the assertion of personal jurisdiction over the defendant comports with 'traditional notions of fair play and substantial justice' under the circumstances of the particular case." Id. (quoting Daimler, 134 S. Ct. at 754).

Because Federal Rule of Civil Procedure 4(k) provides for "personal jurisdiction over a defendant . . . who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located," personal jurisdiction typically is "determined in accordance with the law of the state where the court sits." Arrowsmith v. United Press Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en banc). Hence, the district court "look[s] first to the long-arm statute of the forum state." Friedman v. Bloomberg LP, 871 F.3d 185, 191 (2d Cir. 2017). In Connecticut, jurisdiction over foreign limited liability partnerships is authorized by Conn. Gen. Stat. § 52-59b(a), Friedman v. Bloomberg LP, 180 F. Supp. 3d 137, 144 n.3 (D. Conn. 2016), aff'd in part, rev'd in part on other grounds, 871 F.3d 185, which provides in relevant part:

[A] court may exercise personal jurisdiction over any nonresident individual, foreign partnership or foreign voluntary association, . . . who in person or through an agent:

(1) Transacts any business within the state;

(2) commits a tortious act within the state . . . ; [or]

(3) commits a tortious act outside the state causing injury to person or property within the state . . . , if such person or agent

(A) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or

(B) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce.

"[T]he plaintiff bears the burden of showing that the court has jurisdiction over the defendant." Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir. 1996). "[W]hen a motion to dismiss . . . is decided on the basis of affidavits and other written materials," the plaintiff may carry its burden "by pleading in good faith . . . legally sufficient allegations of jurisdiction, i.e., by making a 'prima facie showing' of jurisdiction." MacDermid, Inc. v. Deiter, 702 F.3d 725, 727 (2d Cir. 2012); Whitaker v. Am. Telecasting, 261 F.3d 196, 208 (2d Cir. 2001). In assessing whether such a showing has been made, the complaint's factual allegations are "assumed to be true" and "construed in the light most favorable to the plaintiff." Deiter, 702 F.3d at 728; Whitaker, 261 F.3d at 208. The court need "not draw argumentative inferences in the plaintiff's favor," however, nor is it "required to accept as true a legal conclusion couched as a factual allegation." Licci ex rel. Licci v. Leb. Can. Bank, 673 F.3d 50, 59 (2d Cir. 2012). At the pleading stage, the plaintiff must plausibly allege "facts that, if credited by the ultimate trier of fact, would suffice to establish jurisdiction over the defendant." Id.

II. Background

The procedural background to this case is quite complicated (aptly deemed "tortured" by Statek). See Mem. Opp'n Mot. Dismiss, Doc. No. 90, at 8 ("Mem. Opp'n"). On October 28, 2005, Statek and its parent company, Technicorp International II ("TCI II"), filed suit in Connecticut Superior Court against Coudert, Coudert partner Steven Beharrell, and others.¹ See Compl., Doc. No. 1-2, at 3, Statek Corp. v. Coudert Bros. LLP, No. 3:05-cv-01889 (JBA)("Statek I"). Statek alleged the defendants had aided a global money laundering, fraud, and tax evasion scheme perpetrated by Statek's former directors, Hans Frederick Johnston and Sandra Spillane.² See id. Johnston and Spillane wrongfully diverted over $30 million from Statek and TCI II and concealed it around the world. See Am. Compl., Doc. No. 65, at 5. Beharrell, based in Coudert's London office, served as Statek's outside counsel during the period of the conspiracy.

In 1996, after Johnston and Spillane had been removed, Statek's new directors "asked Coudert to provide information and a complete copy of the files arising out of and relating to the services Coudert had rendered." Id. Coudert sent some of its files to Statek but withheld (and denied the existence of) others. See id. The missing files were subsequently discovered in 2004, after Coudert and Beharrell were subpoenaed by a Bankruptcy Trustee appointed in connection with Johnston's bankruptcy proceedings in England.³ See id. at 7-9. Statek alleges that Coudert's wrongful concealment of the files "breached . . . its professional and fiduciary duties to its client Statek" and "hindered, delayed, and frustrated [Statek] in its ability to discover and recover assets that Johnston and Spillane had misappropriated." Id. at 11.

A. The first removal and remand

On December 12, 2005,⁴ twenty days after return date on the summons, Beharrell removed the case to this court pursuant to 28 U.S.C. § 1441. Beharrell predicated jurisdiction on diversity of citizenship, arguing that the defendants, Coudert (a New York limited liability partnership) and Beharrell (an English subject resident in England), were completely diversefrom the plaintiffs, Statek (a California corporation with principal place of business in Connecticut) and TCI II (a Delaware corporation). The amount in controversy also exceeded $75,000. See Notice of Removal, Doc. No. 1, Statek I.

Statek moved to remand on December 23, 2005, pointing out that the citizenship of Coudert—a limited liability partnership—was "based upon the citizenship of the individual partners." See Conntech Dev. Co. v. Univ. of Conn. Educ. Props., 102 F.3d 677, 681 (2d Cir. 1996). Because some of Coudert's partners resided in California, Coudert was (like Statek) a citizen of California. Therefore, the parties were not completely diverse, and jurisdiction was lacking under 28 U.S.C. § 1332. See Mot. Remand, Doc. No. 8, Statek I; cf. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806).

Beharrell consented to remand on January 20, 2006. Doc. No. 18, Statek I. On January 25, 2006, Judge Arterton granted the motion to remand on consent. Doc. No. 19, Statek I. The case was remanded to Connecticut Superior Court on February 6, 2006.

B. The first removal and remand

Back in state court, Coudert and Beharrell moved to dismiss on grounds of lack of personal jurisdiction and forum non conveniens. See Notice of Removal, Doc. No. 1, at 2. The Superior Court directed the parties to conduct limited jurisdictional discovery in order to establish whether Connecticut was a proper forum. See id.

On September 22, 2006, before the state court ruled on the motions to dismiss, Coudert filed a Chapter 11 bankruptcy petition in the Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court"), which triggered an automatic stay of Statek's lawsuit in Connecticut. See 11 U.S.C. § 362. Statek filed a proof of claim in Coudert's bankruptcy case, in which it sought the same relief as it did in the state court action. See Notice of Removal, Doc.No. 1, at 2. On March 23, 2007, Coudert removed the state court action to this court pursuant to the bankruptcy removal statute, 28 U.S.C. § 1452. See id.

After the second removal, the Bankruptcy Court granted relief from the automatic stay in the bankruptcy proceedings "to allow the parties to proceed to a final determination/resolution of the pending Motions to Dismiss" in this court. See Mem. Opp'n, Doc. No. 90, at 9. I heard argument on the motions to dismiss on February 21, 2008. See Minute Entry, Doc. No. 40. At the close of the hearing, I granted the motions to dismiss on the basis of forum non conveniens, without prejudice to Statek refiling in another forum within 45 days. See Mot. Hr'g Tr. (Feb. 21, 2008), Ex. D to Mot. Dismiss, Doc. No. 86-5, at 17.

Although I granted the motions to dismiss solely on the basis of forum non conveniens, I made a number of comments during the hearing to indicate that I doubted that this court had "personal jurisdiction over either the firm," Coudert, or the "individual partner," Beharrell. See id. at 6. I noted that there was "a fairly strong showing that the matter r[ose] out of activities that occurred...