525 B.R. 871
Bankr. S.D.N.Y.2015Background
- Trustee Irving H. Picard (SIPA trustee for BLMIS and Bernard Madoff) sued French residents Laurence Apfelbaum, her daughter Emilie, and the estate of Doris Igoin to avoid and recover over $150 million in alleged fraudulent transfers from BLMIS.
- Laurence and Emilie opened BLMIS accounts (1995); funds were purportedly invested in U.S. securities via a New York broker‑dealer. Substantial withdrawals were made from BLMIS New York accounts, including transfers within two years of the SIPA filing date.
- Defendants are French residents; Customer Agreements were negotiated and signed in France, in French, and governed by French law; defendants argued most activity and witnesses are in France.
- Procedurally, defendants moved to dismiss for lack of personal jurisdiction and on forum non conveniens grounds; the Court allowed jurisdictional discovery and supplemental briefing.
- Court found the Trustee made a prima facie showing of specific personal jurisdiction based on contracts with a New York broker, account activity (withdrawals routed from New York), and purposeful availment, but ordered that jurisdiction be tried with the merits because jurisdictional facts are disputed and intertwined with the transfers at issue.
- Court denied dismissal on forum non conveniens grounds, finding the U.S. forum (Bankruptcy Court in New York) adequate and more efficient given the SIPA liquidation, the locus of core evidence, and U.S. public interests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction (specific) | Defendants purposefully availed themselves of U.S. markets by contracting with and withdrawing funds from New York BLMIS accounts; filing SIPA claims and participating in litigation support jurisdiction. | Defendants’ dealings occurred in France (agreements negotiated/signed in France, French law governs); limited contacts with U.S.; filing SIPA claims and procedural participation do not waive jurisdictional defenses. | Court: Prima facie specific jurisdiction exists (contracts to invest in U.S., account withdrawals from New York, purposeful availment). Jurisdictional facts disputed and intertwined with merits, so jurisdiction will be tried with the merits. |
| Effect of filing SIPA customer claims | Filing a SIPA claim subjects defendants to bankruptcy court jurisdiction akin to filing a proof of claim. | Filing customer claims does not waive jurisdiction for avoidance actions unrelated to claims-allowance process; claims were denied and not adjudicated by the court. | Court: Filing customer claims did not submit defendants to jurisdiction for the Trustee’s fraudulent‑transfer claims here. |
| Participation in adversary proceeding | Defendants’ stipulations and motion to withdraw the reference demonstrate submission to court’s jurisdiction. | Stipulations expressly reserved jurisdictional defenses; limited participation does not constitute waiver. | Court: Participation cited by Trustee insufficient to establish submission or waiver. |
| Forum non conveniens | Trustee: New York is appropriate (home forum), efficient for SIPA liquidation, evidence located in U.S., strong U.S. interest. | Defendants: France is adequate and preferable (contracts/witnesses/documents in France; French blocking statute; French law governs). | Court: Denied dismissal. New York forum entitled to strong deference; private and public factors favor staying in U.S.; French blocking statute and convenience concerns insufficient to overcome presumption. |
Key Cases Cited
- Picard v. JPMorgan Chase & Co., 721 F.3d 54 (2d Cir. 2013) (describing Madoff scheme and related trustee litigation)
- Walden v. Fiore, 134 S. Ct. 1115 (U.S. 2014) (minimum‑contacts analysis focuses on defendant’s own contacts with the forum)
- Helicopteros NacionaleS de Colombia, S.A. v. Hall, 466 U.S. 408 (U.S. 1984) (due‑process limits on personal jurisdiction)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (purposeful availment and foreseeability in jurisdictional analysis)
- Licci v. Lebanese Canadian Bank, SAL, 20 N.Y.3d 327 (N.Y. 2012) (repeated use of New York correspondent accounts can constitute purposeful availment)