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Community Finance Group, Inc. v. Stanbic Bank Limited

United States District Court, S.D. New York

July 10, 2015


Jay Kanetkar, Englewood Cliffs, NJ, for Plaintiff.

Mark G. Hanchet, Robert W. Hamburg, Mayer Brown LLP, New York, NY, for Defendant Stanbic Bank Limited.


DENISE COTE, District Judge.

Plaintiff Community Finance Group, Inc. ("CFG") brings this diversity action alleging state law claims based on negligence and breach of fiduciary duty. Defendant Stanbic Bank Limited ("Stanbic")[1] moves to dismiss the complaint primarily on the ground that Stanbic is not subject to personal jurisdiction in New York. For the following reasons, Stanbic's motion to dismiss is granted.


The following facts are asserted in the complaint and taken from documents integral to those claims. This cause of action arises out of CFG's attempt to purchase 300 kilograms of gold bullion from defendant Great Lakes and a related company, Zilicon Freighters, Ltd. ("Zilicon"), both Kenyan entities.

In February 2009, CFG became aware of the opportunity to purchase gold bullion located in Kenya through discussions with John Saina ("Saina"), a Kenyan national. As part of CFG's due diligence on the transaction, CFG held a telephone call with Illunga Ngoei ("Ngoei") on May 27, 2009, a representative of a gold mine owner and Zilicon. At some point in May, CFG decided to go forward with the transaction provided that the existence of the gold could be verified.

Saina traveled to Kenya on May 29, to investigate the transaction. On June 1, Saina went to the Kenyan offices of defendant Great Lakes on CFG's behalf to verify the existence of the gold and take samples. Following this inspection, CFG and Zilicon entered into a contract for the delivery of 300 kilograms of gold to the United States on June 2.[2] On June 4, CFG also agreed to transfer $350, 000 to Zilicon's attorney to be held in escrow to cover Kenyan taxes, customs fees, and storage.

On June 11, a representative of CFG traveled to Kenya to verify the existence of the gold and complete the transaction in person. Following the representative's review, CFG agreed to immediately transfer the $350, 000 to a bank account belonging to Great Lakes to expedite the delivery. On June 12, CFG initiated a wire transfer of $350, 000 from its bank account in Minnesota to Great Lakes' bank account maintained at Stanbic. The wire transfer was routed through Stanbic's correspondent account with Deutsche Bank Trust Company ("Deutsche Bank") in New York.

On June 17, CFG received a fax copy of the wire transmission from Stanbic ("Wire Transfer Receipt"). The Wire Transfer Receipt reads: "NOTE THAT BEFORE WE PAID THE BENEFICIARY WE DID OUR DUE DILIGENCE AND THE BENEFICIARY BROUGHT TO THE BANK DOCUMENTS SHOWING THAT THEY WE(RE) SUPPLYING SOME MATERIAL."

At some point after the wire transfer, CFG discovered the transaction was fraudulent. On June 22 and 23, CFG filed complaints with various authorities in Kenya, resulting in the arrest of Ngoei and other participants in the fraud. CFG also discovered Ngoei and the other participants had perpetrated this scheme at least once before using an account at Stanbic.

CFG has already filed two lawsuits related to these events. On March 17, 2010, CFG filed suit in the District of Minnesota against Kenya and Kenyan government entities. Cmty. Fin. Grp., Inc. v. Republic of Kenya, 663 F.3d 977 (8th Cir. 2011). The district court dismissed the action for a lack of subject matter jurisdiction. Id . The Court of Appeals for the Eighth Circuit affirmed the dismissal. Id.

CFG then filed suit against Stanbic in the District of New Jersey in June 2012. Cmty. Fin. Grp., Inc. v. Stanbic Bank Ltd., 12cv3851 (FSH), 2013 WL 3223371 (D.N.J. June 25, 2013). The district court denied Stanbic's first motion to dismiss for lack of personal jurisdiction without prejudice and allowed the plaintiff to obtain jurisdictional discovery from Stanbic. Discovery included documents related to Stanbic's account with Deutsche Bank. Upon completion of discovery, Stanbic renewed its motion to dismiss. The district court then dismissed the case for lack of personal jurisdiction over Stanbic on June 25, 2013. Id. at *5.

CFG filed the instant action on July 17, 2014. Stanbic moved to dismiss the complaint on February 5, 2015, primarily on the ground that this Court lacks personal jurisdiction over Stanbic. Stanbic also moves to dismiss CFG's claims as untimely, for failure to state a claim, and under the ...

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