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SEMI CONDUCTOR MATERIALS v. CITIBANK INT'L PLC

July 15, 1997

THE SEMI CONDUCTOR MATERIALS, INC., Plaintiff,
v.
CITIBANK INTERNATIONAL PLC, Defendant.



The opinion of the court was delivered by: RAKOFF

 JED S. RAKOFF, U.S.D.J.

 Plaintiff Semi Conductor Material, Inc. sued defendant Citibank International PLC for various claims arising out of defendant's alleged failure to fulfill its obligations to plaintiff as the advisor under a letter of credit. Defendant moved to dismiss the complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) and New York Civil Practice Law and Rules ("CPLR") § 301 et seq. Upon consideration of the parties' written submissions and oral argument heard on June 12, 1997, the Court telephonically advised the parties on June 23, 1997 that defendant's motion to dismiss would be granted. This memorandum will serve to confirm that ruling and summarize the reasons therefor.

 The relevant allegations may be briefly stated. Defendant is a foreign corporation organized under the laws of England, with. its principal place of business in London. Plaintiff Semi Conductor Materials, Inc. is a New Jersey corporation alleged to have maintained an office and phone number in New York, listed in its President's name, from January 1, 1996 to June 1, 1996.

 On March 26, 1996, Rastriya Banijya Bank of Nepal, at the request of Agricultural Inputs Corporation in Nepal, instructed defendant's Kathmandu branch office to establish a letter of credit in favor of plaintiff in an initial amount of $ 2.35 million, increasing up to $ 11.75 million. Still another bank, Finansbank (Holland) N.V., was designated to "negotiate" demands for payment under the letter of credit. In March and April, 1996, plaintiff sought and obtained a reduction in defendant's confirmation fee and paid the fee into defendant's account held by Citibank N.A. (a separate corporation) in New York. Notwithstanding plaintiff's payment of the confirmation fee, however, defendant failed to confirm the letter of credit or take other steps prerequisite to plaintiff's being able to draw down the credit, thus allegedly causing substantial damages to plaintiff.

 Turning to the instant motion, it is undisputed that personal jurisdiction in a diversity action is determined by the law of the state in which the court sits, here, New York. Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865 (2d Cir. 1996). On a motion to dismiss pursuant to Rule 12(b)(2), the Court may determine the motion on the basis of pleadings and affidavits presented or may hold an evidentiary hearing, see Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994); but if the former approach is taken, plaintiff, in order to prevail, need only make out a prima facie case of jurisdiction. Koehler, 101 F.3d at 865; Robinson, 21 F.3d at 507. Here, however, even though plaintiff claims the Court has jurisdiction over defendant pursuant to CPRL § 301 and § 302(a), the Court concludes that plaintiff has failed to make even a prima facie showing that such personal jurisdiction exists.

 A. CPLR § 301

 With respect to plaintiff's assertion of jurisdiction under New York's general jurisdiction provision, CPLR § 301, that provision states that "a court may exercise such jurisdiction over persons, property or status as might have been exercised heretofore," i.e., under New York law prior to 1962. CPLR § 301. In particular, the provision confers personal jurisdiction over a foreign corporation "engaged in such a continuous and systematic course of 'doing business' here as to warrant a finding of its 'presence' in this jurisdiction." McGowan v. Smith, 52 N.Y.2d 268, 272, 419 N.E.2d 321, 323, 437 N.Y.S.2d 643, 645 (1981); Koehler, 101 F.3d at 865. The traditional indicia to which courts refer in deciding whether a foreign corporation is doing business in New York under this approach include (1) the existence of an office in New York, (2) the solicitation of business in New York, (3) the existence of bank accounts or other property in New York, and (4) the presence of employees of the foreign defendant in New York. Kulas v. Adachi, 1997 U.S. Dist. LEXIS 6868, 1997 WL 256957, *3 (S.D.N.Y. May 16, 1997) (citing Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 58 (2d Cir. 1985).

 Furthermore, plaintiff's reliance on United Rope Distributors, Inc. v. Kimberly Line, 785 F. Supp. 446, 450-51 (S.D.N.Y. 1992), is inapposite because Citibank International PLC, unlike the defendant in United Rope, does not transact "substantially all" of its business through its New York bank accounts. Nat'l Sun Industries, Inc., No. 94-6006, slip op. at 8. Likewise, plaintiff's reliance on Gelfand v. Tanner Motor Tours, Ltd., 385 F.2d 116, 121 (2d Cir. 1967), cert. denied, 390 U.S. 996, 20 L. Ed. 2d 95, 88 S. Ct. 1198 (1968), is similarly misplaced because defendant does not rely on its affiliate, Citibank N.A., to perform services that its own officials would otherwise have to come to the forum to perform.

 Accordingly, defendant's relationship with Citibank N.A., which consists of defendant's maintenance of four active bank accounts in Citibank N.A.'s New York office and its use of one of those accounts to receive plaintiff's "confirmation fee" paid in connection with the letter of credit at issue here, does not constitute "doing business" for the purposes of CPLR § 301.

 B. CPLR § 302

 Plaintiff also seeks to assert personal jurisdiction pursuant to CPLR § 302(a)(1), which provides:

 
As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary ... who in person or through an agent ...

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