United States District Court, M.D. North Carolina
RICHARD W. MANN,
EUROPEAN AMERICAN INVESTMENT BANK AG, Defendant.
MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
JOE L. WEBSTER, Magistrate Judge.
This matter is before the court on Defendant's motion to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(3). (Docket Entry 16.) Plaintiff has filed a response in opposition to the motion. (Docket Entry 21.) For the following reasons, the court will recommend that Defendant's motion to dismiss be granted.
I. FACTUAL BACKGROUND
Plaintiff filed the Complaint in this action on June 28, 2011, alleging causes of action against Defendant European American Investment Bank AG ("Euram Bank") for breach of contract, negligence, fraud, breach of the fiduciary duty of good faith and fair dealing, breach of contract constituting professional malpractice, breach of warranty, and fraudulent inducement. ( See, generally, Compl., Docket Entry 1.) As alleged by Plaintiff, in 2002 he engaged in a "Creative Financial Solution" transaction (i.e., tax shelter) designed and promoted by Euram Bank, called the "Euram Rowan Strategy." Plaintiff alleges he paid Defendant $875, 000 "to engage in the strategy." ( Id. ¶ 6.) According to the allegations of the Complaint, Defendant "provided a cashless paper entry loan of $7 million to allow Plaintiff to increase the size of the transaction to the targeted loan amount of $17 million." ( Id. ¶ 9.) Ultimately, the transaction was disallowed by the Internal Revenue Service and Plaintiff was assessed tax penalties in the amount of $911, 869.00. ( Id. ¶ 10.)
Euram Bank, the only Defendant named in the Complaint, is an Austrian company with its principal place of business in Vienna, Austria. ( See Affidavit of Senta Penner ¶ 2, Docket Entry 17-1.) According to Penner, Euram Bank's former Chief Financial Officer and Managing Board Member, Euram Bank does not conduct or solicit business in the United States, has no affiliates in the United States, is not incorporated or licensed to business in the United States, has no offices or bank accounts in the United States, owns or leases no property in the United States, and pays no taxes in or to the United States. ( Id. ¶¶ 4-8.)
Plaintiff alleges that the primary contact between Euram Bank and this forum was the loan obtained by Plaintiff from Euram Bank. (Compl. ¶ 9; see Declaration of Antonio E. Lewis, Ex. A, Loan Agreement, Docket Entry 18-1.) In his affidavit, Plaintiff averred that he was contacted at his home in North Carolina by Euram Bank with information regarding the Rowan tax strategy. (Pl.'s Aff. ¶ 2, Docket Entry 21-7.) Plaintiff also alleges that "Defendant used Pali Capital to assist in the U.S. marketing efforts" and that "Tom Seck, (located in Charlotte, North Carolina) worked in design, marketing and implementation of tax strategies, including the Euram Rowan strategy." (Compl. ¶ 12.)
On a Rule 12(b)(2) motion, a plaintiff has the burden "to prove grounds for jurisdiction by a preponderance of the evidence." Mylan Laboratories, Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir. 1993) (citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989)). However, where the court does not conduct an evidentiary hearing and relies only on the pleadings and affidavits, a plaintiff need only make a prima facie showing of jurisdiction. In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997). The district court, in considering such a motion, must draw all reasonable inferences arising from the proof, and resolve all factual disputes, in the plaintiffs favor. Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.3d 390, 396 (4th Cir. 2003). Once a defendant has provided specific denials contrary to a plaintiff's assertion of facts supporting jurisdiction, a plaintiff's "bare allegations that the defendants had had significant contacts with the [forum] state" are insufficient to establish jurisdiction by a preponderance of the evidence. Id. at 402-03.
The court must perform a two-step analysis when determining if it has personal jurisdiction over a non-resident defendant. Christian Sci. Bd. of Dirs. of the First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir. 2001). "First, the exercise of jurisdiction must be authorized by the long-arm statute of the forum state, and second, the exercise of personal jurisdiction must also comport with Fourteenth Amendment due process requirements." Id. North Carolina's long-arm statute states that the state has jurisdiction over a defendant "engaged in substantial activity within this State, whether such activity is wholly interstate, intrastate, or otherwise." N.C. Gen. Stat. § 1-75.4(1)(d) (2013). North Carolina's long-arm statute "has been interpreted to extend to the outer limits allowed by the Due Process Clause." Le Bleu Corp. v. Standard Capital Grp., Inc., 11 F.Appx. 377, 379 (4th Cir. 2001). "Thus, the dual jurisdictional requirements collapse into a single inquiry as to whether the defendant has such minimal contacts' with the forum state that maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Nolan, 259 F.3d 209, 215 (4th Cir. 2001) (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Second, the court must determine that the exercise of jurisdiction complies with the requirements of the Due Process Clause. "Due process requires that in order to subject a defendant to personal jurisdiction, the defendant must have certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1199 (4th Cir. 1993) (quoting Int'l Shoe, 326 U.S. at 316). "These contacts must be of such a level that they are equivalent to physical presence in the forum state so that it would be fair to hale a defendant into court in the forum based on any claim raised against the defendant no matter where the facts underlying the claim arose." Lab. Corp. of Am. Holdings v. Schumann, 474 F.Supp.2d 758, 761 (M.D. N.C. 2006) (citation omitted).
Since International Shoe was decided, courts have distinguished between general and specific jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2853 (2011). Specific, or case-linked, jurisdiction "depends on an caffiliatio[n] between the forum and the underlying controversy'... that takes place in the forum State and is therefore subject to the State's regulation." Id. (quoting Von Mehren & Truatman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 (1996)). General jurisdiction, on the other hand, may be asserted over a corporation of another state "when their affiliations with the State are so continuous and systematic' as to render them essentially at home in the forum State." Goodyear, 131 S.Ct. at 2851 (citing Int'l Shoe, 326 U.S. at 317); see also ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir. 2002). Here, Plaintiff has conceded that there is no basis for this court to exercise general jurisdiction. (Pl.'s Mem. at 16-17.) The Court, therefore, will limit its discussion to the issue of specific jurisdiction.
B. Specific Jurisdiction
If a cause of action arises out of or relates to a defendant's contacts with the forum State, the court can exercise specific jurisdiction. A defendant has minimum contacts with a jurisdiction so as to subject it to specific jurisdiction in the forum state if "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1990); see also Burger King v. Rudzewicz, 471 U.S. 462, 474 (1985). Under this standard, "it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958). To determine the existence of specific jurisdiction, then, a court considers: "(1) the extent to which the defendant purposely availed' itself of the privilege of conducting activities in the State; (2) whether the plaintiffs' claims arise out of those activities directed at the State; and (3) ...