The opinion of the court was delivered by: DENISE COTE, District Judge
This Opinion addresses whether there is personal jurisdiction
in New York over a Hong Kong bank for accepting fraudulently
endorsed checks for deposit, and whether the plaintiff has stated
a claim against the American bank that assisted in the clearance
of these checks. On December 18, 2003, defendant Dah Sing Bank,
Limited ("Dah Sing") moved to dismiss the claims against it for
lack of personal jurisdiction. On January 12, 2004, defendant Union Bank of California ("Union
Bank") moved to dismiss the claims against it because (i) Dah
Sing is an indispensable party with respect to the claims against
Union Bank; (ii) Hong Kong is the most convenient forum for those
claims and New York has no meaningful nexus to them; and (iii)
plaintiff Zurich American Insurance Company ("Zurich") has failed
to state a claim against Union Bank. For the reasons set forth
below, the motions by Dah Sing and Union Bank for lack of
personal jurisdiction and for failure to state a claim,
respectively, are granted.
The plaintiff, Dah Sing, and Union Bank have each submitted
affidavits, declarations, and documents in connection with these
motions.*fn1 The following is taken from the complaint and
these submissions.*fn2 Complaint
Zurich filed the original complaint in this diversity
action*fn3 on October 2, 2003, and an amended complaint on
November 25.*fn4 The amended complaint states that defendant
Wan Kwok Ping ("Wan")*fn5 was an employee of Putnam, a New
York corporation with its corporate offices in New York City.
While Wan did not have check writing privileges and he was not a
corporate officer of Putnam, he did deposit checks for Putnam,
and he created account receivable folders for Putnam's customers.
The amended complaint alleges that Wan fraudulently altered
checks that he stole in New York that were made payable to Putnam
by either (i) adding his own name to the payee line on a check,
endorsing it, and depositing the check in his personal account
maintained at The Bank of East Asia Limited ("BEA")*fn6 in New York, or (ii)
endorsing the check in Putnam's name and depositing it in an
"unauthorized corporate account" at Dah Sing in Hong
Kong.*fn7 Beginning on or about March 2001 and continuing
through March 2002, Wan allegedly converted approximately
The amended complaint asserts claims for conversion, money had
and received, fraud, and unjust enrichment against Wan. The
amended complaint asserts that Dah Sing, Union Bank, and BEA are
each liable for conversion, money had and received, and
negligence. The pleading does not identify the role played by
Union Bank in the fraud. It merely asserts in conclusory fashion
that the three bank defendants "accepted for deposit, forwarded
for collection, cleared, collected and credited" the checks.
Dah Sing has submitted evidence to show that Putnam does not and has never maintained an account at Dah Sing. The "corporate
account" at Dah Sing to which the Amended Complaint refers is
Account No. 11-303-1161-9 ("the "Hong Kong Account"), a checking
account opened at Dah Sing's Johnston Road Branch in Hong Kong by
Mr. Chui Man Kuen Fozwagz ("Chui") on or about April 25, 2001.
The Hong Kong Account was opened in the name of Putnam Rolling
Ladder Co. ("Putnam Co."), a sole proprietorship with its place
of business in Hong Kong. The Company Account Opening Form
submitted to Dah Sing to open the Hong Kong Account indicates
that Chui is the sole proprietor of the company and the principal
contact person for the Hong Kong Account.
As part of the Hong Kong Account opening papers, Chui submitted
to Dah Sing a Business Registration Certificate for his company
showing the company to be registered to do business in Hong Kong
with a Hong Kong business address. Dah Sing mailed monthly
account statements for the Hong Kong Account to this address.
These account statements were the only form of communication sent
by Dah Sing regarding the Hong Kong Account. All deposits to the
Hong Kong Account were made in person at Dah Sing's office in
Hong Kong. Determination of the validity of the deposits at issue
i.e., that each check deposited was payable to Dah Sing's
customer and properly endorsed was made in Hong Kong. Only
after the checks were accepted for deposit in accordance with
Hong Kong banking laws were the checks forwarded to the United
States for clearing and collection.
On November 13, 2001, Chui submitted a Notification of Change of Signing Instructions form to Dah Sing authorizing
either Chui or the individual defendant Wan to sign for the Hong
Kong Account. Chui also submitted photocopies of Chui's and Wan's
respective Hong Kong photo identification cards.
Dah Sing has also submitted evidence to support the following.
Dah Sing is a foreign corporation organized under the laws of
Hong Kong and provides banking and financial services. Dah Sing
operates through a series of branch offices located in Hong Kong,
Kowloon and the New Territories and through a representative
office in People's Republic of China. Dah Sing is not a
state-owned bank. Neither Dah Sing nor its parent company, Dah
Sing Financial Holdings Limited ("DSFH") is or represents itself
to be an agency of a foreign state.
Dah Sing is not registered or licensed to conduct business in
the State of New York. It does not own any real property, lease
property, or maintain any office or telephone number in New York.
Dah Sing has no employees, representatives, directors or officers
who live or work in New York, and has no agents located in New
York to promote its interests. Neither does it have any
subsidiaries or affiliates in New York or anywhere in the United
States. Further, Dah Sing conducts no advertising or public
relations, does not solicit business, and has no investor
relations office in New York.
While Dah Sing maintains correspondent bank relationships with banks in the United States for conducting U.S. dollar
transactions on behalf of Dah Sing clients in Hong Kong, Dah Sing
does not conduct any business transactions in New York or in the
United States on its own behalf. With respect to U.S. checks that
are deposited by its customers in Hong Kong, Dah Sing forwards
the deposited checks to Union Bank in California for clearing and
collection via the U.S. clearing system.
Dah Sing has a website that provides information to potential
customers and offers current customers the ability to conduct
certain banking transactions over the internet. Part of Dah
Sing's internet services includes the issuance of a PIN (Personal
Identification Number) that provides online access to those
services and provides existing customers with the ability to
perform limited banking transactions over the Internet. A Dah
Sing savings, checking, or deposit bank account can only be
opened by visiting one of the bank's branches in Hong Kong. While
customers may obtain information about, and download certain loan
and credit card application forms from Dah Sing's website, such
applications cannot be processed without the customer visiting
one of Dah Sing's branches in Hong Kong. Dah Sing asserts that it
has only issued credit cards to Hong Kong-based customers.
The "iBanking" feature on Dah Sing's website only allows the
bank's corporate customers based in Hong Kong to perform limited
banking services over the internet. To date, no U.S.-based
customer has made use of Dah Sing's iBanking services. Dah Sing has never mailed any software or materials relating to its
iBanking service to any U.S.-based customer.
The Doherty Affidavit asserts that Dah Sing offers corporate
credit cards to multinational customers of the General Electric
Company ("GE"). Under this agreement with GE, Dah Sing acts as a
local issuer of corporate credit cards for companies operating in
Hong Kong. According to an affidavit submitted by the Head of
Bank Services for Dah Sing, however, the bank ...