Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Elmaliach v. Bank of China Limited

March 26, 2010

KEREN ELMALIACH, AS AN INDIVIDUAL, AS STATUTORY REPRESENTATIVE OF THE ESTATE OF EMI ELMALIACH AND AS NATURAL GUARDIAN OF PLAINTIFF, JAN ELMALIACH, ET AL., PLAINTIFFS,
v.
BANK OF CHINA LIMITED, 410 MADISON AVENUE NEW YORK, NEW YORK 10017, DEFENDANT.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.

MEMORANDUM OPINION & ORDER

Plaintiffs in this action are Israeli citizens who were injured in attacks carried out by Palestine Islamic Jihad ("PIJ") and Hamas between April 17, 2006 and January 29, 2007 ("the terrorist attacks"), family members of victims killed in these attacks, and the estates of victims killed in these attacks. (Cmplt. ¶ 2) Plaintiffs commenced this action in Supreme Court for the State of New York, New York County, on February 12, 2009, alleging claims under the Israeli Civil Wrongs Ordinance (New Version) -- 1968 for negligence and breach of statutory duty. (Id. ¶ 1) Plaintiffs asserts that Defendant Bank of China Limited ("BOC") is liable for the damages they suffered from the terrorist attacks, because BOC provided banking services to PIJ and to Hamas which "caused, enabled and facilitated the terrorist attacks." (Id. ¶ 3)

On March 9, 2009, Defendant filed a notice of removal pursuant to 28 U.S.C. §§ 1441 and 1446. (Notice of Removal ¶ 1) [Docket No.1] Thereafter, Defendant moved pursuant to Fed. R. Civ. P. 41(d) for an award of costs and a stay of these proceedings [Docket No. 5], arguing that this action is identical to an earlier action that Plaintiffs had filed in California and then voluntarily dismissed. Defendant has also moved to dismiss under Fed. R. Civ. P. 12(b)(6) [Docket No. 17], arguing that the Complaint fails to state a claim upon which relief can be granted. In the alternative, Defendant argues that this action should be dismissed pursuant to the doctrine of forum non conveniens.

In an order dated August 10, 2009 [Docket No. 38], this Court directed the parties to submit letter briefs addressing whether this Court has subject matter jurisdiction over this action. In their submissions, both sides asserted that this Court has subject matter jurisdiction. (Aug. 17, 2009 Loughlin Ltr. at 1; Aug. 21, 2009 Tolchin Ltr. at 2)

For the reasons stated below, this Court has no subject matter jurisdiction. Accordingly, this action will be remanded to state court, and Defendant's pending motions will be denied as moot. See In re Fry, No. 03-20394, 2008 Bankr. LEXIS 4367 (Mar. 27, 2008 Bankr. S.D.Ga.) (refusing to consider motion for award of costs under Fed. R. Civ. P. 41(d) after concluding that court lacked subject matter jurisdiction).

BACKGROUND

I. THE COMPLAINT

Plaintiffs are all citizens of Israel. (Id. ¶ 4). Defendant BOC is headquartered in and organized under the laws of the People's Republic of China, and has branches in New York, New York. (Id. ¶ 31; Notice of Removal ¶ 17)

The Complaint alleges that in July 2003, BOC began providing extensive banking services to PIJ and Hamas, executing dozens of wire transfers for the PIJ and Hamas leadership in Iran, Syria, and elsewhere in the Middle East. (Id. ¶ 63) Plaintiffs further allege that these transfers were executed by and through BOC's branches in the United States. (Id. ¶ 63) According to the Complaint, most of these transfers were made to an account at a BOC branch in Guanzhou, China, which was owned by a senior operative and agent of PIJ and Hamas. (Id. ¶ 63) The money was then transmitted to PIJ and Hamas leadership in Israel, the West Bank, and the Gaza Strip, and was used in connection with planning, preparing for, and executing the terrorist attacks. (Id. ¶ 64)

Plaintiffs allege that [a]s a result of [BOC's] conduct, the PIJ and Hamas were able to transfer million[s] of dollars in funds to their terrorist leadership in Israel, the West Bank and the Gaza Strip, which substantially increased and facilitated their ability to plan and carry out terrorist attacks, including the Terrorist Attacks in which the instant plaintiffs were harmed and the decedents killed. The Terrorist Attacks in which the instant plaintiffs were harmed and the decedents killed were thereby enabled, facilitated, and proximately caused by the conduct of Defendant [BOC].... (Id. ¶ 69)

The Complaint sets out multiple means by which BOC became aware or "should have known" that the wire transfers were being made by PIJ and Hamas for the purpose of carrying out terrorist attacks, including, inter alia: (1) information disclosed by Israeli counter-terrorism officials to People's Republic of China ("PRC") officials at an April 2005 meeting (id. ¶ 71); (2) the circumstances surrounding the wire transfers, which involved "typical indicia of transactions made for illegal purposes" (id. ¶ 73); and (3) through various duties imposed on BOC by certain United States banking statutes and regulations, the performance of which should have alerted BOC to the nature and purpose of these transfers. (Id. ¶¶ 74, 75, 77, 85)

The Complaint asserts claims for negligence and breach of statutory duty under Israeli law, and seeks $750 million in damages. (Id. ¶¶ 79-101)

II. PROCEDURAL HISTORY

This action has a long and tortured procedural history, reflecting several false starts resulting from the pursuit of erroneous legal theories, and contradictory positions asserted by Plaintiffs' counsel.

A. Proceedings in the Central District of California

On August 21, 2008, Plaintiffs filed Zahavi et al. v. Bank of China Ltd., No. BC396714. [Docket No. 6, Ex. A ("Zahavi Cmplt.")] in Superior Court of the State of California, Los Angeles County. That action involved the same plaintiffs, the same defendant, the same facts, and the same lead counsel as the instant action; the two complaints differ only insofar as the Israeli breach of statutory duty claim in Zahavi was premised on violations of United States statutes and regulations. (Zahavi Cmplt. ¶ 102) On September 22, 2008, BOC removed the action to the United States District Court for the Central District of California, where the case was assigned to District Judge Manuel L. Real. [No. 08 Civ. 6236 (C.D. Cal.), Docket No. 1].

On October 21, 2008, the Zahavi plaintiffs filed an amended complaint and a motion to remand the case to state court. [No. 08 Civ. 6236 (C.D. Cal.), Docket No. 26 ("Zahavi Amended Cmplt.")]. In their amended complaint, the Zahavi plaintiffs deleted references to U.S. statutes and regulations -- apparently in a misguided effort to destroy federal subject matter jurisdiction. In a brief accompanying their motion to remand, the Zahavi plaintiffs explained thattheir earlier allegation that BOC was liable for the tort of Breach of Statutory Duty under Israeli law because it violated U.S. statutes was improvidently made. Israeli statutory definitional law provides that a Breach of Statutory Duty can arise only from violation of an Israeli statute or regulation. Accordingly, Plaintiffs have filed an amended complaint which properly pleads the Breach of Statutory Duty claim by alleging that BOC violated various Israeli statutory provisions, and omitting the previous claims that BOC violated U.S. federal law.

Thus, this case does not, and in fact never did, turn in any way on the question of whether BOC violated federal law, and there is no basis whatsoever for federal subject-matter jurisdiction over this action. * * * *

[A] determination of BOC's liability for Breach of Statutory Duty under Israeli law would not require any examination at all of U.S. federal law. That is because Plaintiff's assertion that BOC could be held liable for Breach of Statutory Duty on the basis of violations of U.S. federal statutes, was, regrettably, erroneous as a matter of Israeli law. (Loughlin Ltr., Ex. 1 (Plaintiffs' Memorandum of Points and Authorities in support of Motion to Remand in Zahavi et al. v. Bank of China Ltd.), at 4, 6 (emphasis in original).

BOC opposed the remand motion, arguing, inter alia, that a party cannot amend a pleading to defeat removal. (Loughlin Ltr. at 2; [No. 08 Civ. 6236 (C.D. Cal.), Docket No. 30 (Defendant's Opposition to Motion to Remand), at 3]) At a December 1, 2008 hearing, Judge Real -- without discussion*fn1 -- stated that "[t]he motion to remand is denied. There is a federal claim in the complaint, and that presides in this court and not in the superior court." (Loughlin Ltr., Ex. 2 (Transcript of December 1, 2008 proceedings in Zahavi et al. v. Bank of China Ltd.), at 4) On December 3, 2008, Judge Real issued a one-page written order to the same effect. (Id., Ex. 3) On January 5, 2009, Judge Real denied Plaintiffs' motion for relief from the order denying the remand motion. (Id., Ex. 5)

On January 2, 2009, BOC filed a motion to dismiss, arguing that (1) many of Plaintiffs' claims were barred by the statute of limitations; (2) plaintiffs failed to plead a legally cognizable claim under Israeli law; and (3) the case should be transferred to China under the doctrine of forum non conveniens. Judge Real scheduled a hearing on BOC's motion for February 2, 2009. (Loughlin Ltr. at 3) On February 1, 2009, however, Plaintiffs filed a notice of voluntary dismissal pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i). [No. 08 Civ. ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.