440 B.R. 274
Bankr. S.D.N.Y.2010Background
- The Trustee moves to dismiss for lack of personal jurisdiction over Miri Chais in an adversary proceeding arising from the Madoff Ponzi scheme.
- Chais allegedly transferred hundreds of millions through BLMIS accounts, benefiting family members and entities; she is related to Stanley Chais through marriage.
- Chais held a US-based Individual and Joint BLMIS account and a California bank account; transfers occurred from New York accounts directed by a New York agent.
- Account agreements indicate agency in New York; most contacts and transactions with BLMIS occurred in New York, with assets ultimately linked to Chais.
- The Court previously held foreign defendants with transfers through BLMIS are subject to this Court’s personal jurisdiction; this decision addresses that issue for Chais.
- The Court finds that it has personal jurisdiction over Chais and denies the motion to dismiss on the personal-jurisdiction ground.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Chais has minimum contacts with the United States sufficient for jurisdiction | Chais purposefully availed US benefits; maintained US accounts and an agent in NY. | Chais’ contacts are minimal and passive; she did not initiate US activities. | Yes; minimum contacts shown. |
| Whether the claims arise from Chais' contacts with the forum | Transfers to/from BLMIS accounts relate to the fraud claims and the US-based accounts. | Actions were not connected to Chais’ US contacts; she was passive recipient. | Yes; claims arise out of or relate to the contacts. |
| Whether exercising jurisdiction would be reasonable under the circumstances | US interests in bankruptcy enforcement and efficient relief support jurisdiction; significant transfers occurred in NY. | Residence abroad could impose burden; not enough showing to overcome reasonable jurisdiction. | Yes; jurisdiction reasonable. |
Key Cases Cited
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment and relatedness test for specific jurisdiction)
- Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102 (1987) (fair play and substantial justice; reasonableness factors)
- Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151 (2d Cir. 1999) (long-arm jurisdiction for claims arising from NY securities transactions)
- Republic of Argentina v. Weltover, Inc., 504 U.S. 607 (1992) (agency theory for minimum contacts in NY)
- In re McLean Indus., Inc., 68 B.R. 690 (Bankr.S.D.N.Y. 1986) (strong US interests in bankruptcy adjudication and efficiency)