Kreit v. Byblos Bank S.A.L.
1:22-cv-10751
S.D.N.Y.Oct 22, 2023Background
- Kreit, a U.S./Syrian dual citizen living in Texas, deposited large sums (≈$4.8M between 2015–2018) into Byblos Bank S.A.L. accounts in Lebanon, funding transfers from his U.S. Wells Fargo account.
- After Lebanon’s 2019 banking crisis, Byblos refused multiple requests by Kreit to wire funds to his U.S. accounts and later closed his accounts, offering a check denominated in Lebanese pounds; Kreit alleges unauthorized conversion of USD to LBP and loss from devaluation.
- Kreit sued in S.D.N.Y. asserting breach of contract, conversion, and fraudulent/voidable transfer claims and sought attachment of Byblos’s correspondent bank accounts in New York; the Court previously denied attachment for lack of personal jurisdiction.
- Kreit’s asserted basis for New York jurisdiction was CPLR § 302(a)(1): that Byblos transacted business in New York through correspondent (nostro) accounts used to move USD.
- Byblos moved to dismiss under Fed. R. Civ. P. 12(b)(2) and 12(b)(6); the Court addressed jurisdiction first and, relying on Daou and related precedent, held Kreit failed to show his claims arose from any New York transactions and dismissed for lack of personal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of specific personal jurisdiction under N.Y. C.P.L.R. § 302(a)(1) based on correspondent accounts | Kreit: Byblos purposefully availed itself of NY banking services and used NY correspondent accounts to receive/move his USD, so claims arise from NY transactions | Byblos: Uses correspondent accounts does not connect the alleged harm to New York; actions causing harm occurred in Lebanon | Dismissed: Kreit failed to allege an actual New York transaction that gave rise to his claims; use of correspondent accounts was incidental/merely coincidental (Daou controlling) |
| Prima facie showing required for pre-discovery jurisdictional pleading | Kreit: Allegations and expert declaration suffice to require jurisdictional discovery | Byblos: Allegations are speculative and insufficient to defeat 12(b)(2) without concrete nexus | Denied: No prima facie showing of jurisdiction; discovery not warranted because Kreit failed to show how it would create a jurisdictional nexus |
| Quasi in rem jurisdiction / attachment of NY-based correspondent funds | Kreit previously sought attachment of NY correspondent accounts to support jurisdiction | Byblos: Attachment improper because no nexus between NY property and the causes of action | Previously denied by the Court; decision stands as law of the case and supports dismissal |
| Other defenses (forum-selection clause, forum non conveniens, failure to state a claim) | Kreit opposed; argued forum appropriate and claims valid | Byblos raised those defenses but court addressed jurisdiction first | Court did not reach these defenses after finding lack of personal jurisdiction |
Key Cases Cited
- Daou v. BLC Bank, S.A.L., 42 F.4th 120 (2d Cir. 2022) (controls; correspondent-account use insufficient for §302(a)(1) where claims do not arise from an actual NY transaction)
- Licci ex rel. Licci v. Lebanese Canadian Bank, S.A.L., 732 F.3d 161 (2d Cir. 2013) (defines correspondent bank accounts and discusses contacts analysis)
- Shaffer v. Heitner, 433 U.S. 186 (U.S. 1977) (jurisdictional inquiry focuses on the relationship among defendant, forum, and litigation)
- Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81 (2d Cir. 2013) (pre-discovery prima facie standard for jurisdictional showing)
- Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560 (2d Cir. 1996) (plaintiff bears burden to show court has personal jurisdiction)
- Eades v. Kennedy, PC Law Offices, 799 F.3d 161 (2d Cir. 2015) (two-prong test for CPLR §302(a)(1): transacts business in state and claim arises from that business)
- In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 659 (2d Cir. 2013) (court need not accept legal conclusions framed as factual allegations)