Bangladesh Bank v. Rizal Commercial Banking Corp.Bangladesh Bank v. Rizal Commercial Banking Corp.
Troy K. Webber, Saliann Scarpulla, Bahaati E. Pitt-Burke, Llinet M.
Certain defendants appeal from an order of the Supreme Court, New York County (Andrea P. Masley, J.), entered January 17, 2023, which, insofar as appealed from as limited by the briefs, denied the motions of defendants RCBC, Romualdo Agarrado, Nestor O. Pineda, Ismael S. Reyes, Brigette B. Capina, Raul Victor B. Tan, and Lorenzo V. Tan to dismiss the complaint as against them under
Sidley Austin LLP, New York (Eamon P. Joyce, Tai-Heng Cheng, Melissa Colon-Bosolet, Melanie Berdecia, Tyler J. Domino and James R. Honer of counsel), for Rizal Commercial Banking Corporation, Brigitte B. Capina, Nеstor O. Pineda, and Romualdo Agarrado, appellants.
The Kochisarli Law Firm, New York (Brian Kochisarli of counsel), for Lorenzo V. Tan, Raul Victor B. Tan, and Ismael S. Reyes, appellants.
The Howley Law Firm P.C., New York (John J.P. Howley of counsel), for Kam Sin Wong, appellant.
Cozen O‘Connor, New York (Jesse R. Loffler and John J. Sullivan of counsel), for respondent.
PITT-BURKE, J.
This appeal raises the interesting question of whether a trial court has the discretion to deny a motion to dismiss a complaint pursuant to
Facts
This case arises from an international fraud and money laundering scheme, whereby plaintiff, the central bank of the
The hackers began to infiltrate plaintiff‘s network in January 2015. By January 2016, they gained access to the SWIFTLIVE1 system used by plaintiff to effectuate transactions. The theft was initiated after close of business on February 4, 2016, when the hackers sent 36 payment orders directing the transfer of nearly $1 billion from plaintiff‘s NY Fed account to various recipients. While nearly all the transfers were initially rejected due to missing routing information, it is alleged that the hackers obtained RCBC‘s correspondent account routing information from RCBC individuals and sent revised orders to the NY Fed. Four payment orders, totaling over $81 million, were processed by the NY Fed.
To facilitate the theft, the hackers conspired with defendant RCBC, one of the Philippines‘s largest banks. Because RCBC did not have an account with the NY Fed, the funds could not be transferred out of the US directly from plaintiff‘s NY Fed account. Therefore, the hackers used four RCBC correspondent accounts at New York and Pennsylvania branches of Wells Fargo, Bank of New York and Citibank to transfer plaintiff‘s stolen funds. Importantly, these intermediary banks had access to the NY Fed‘s Fedwire system and could transfer the stolen funds immediately to the four RCBC correspondent accounts. After the initial transfer to the correspondent accounts, the stolen funds were then transferred abrоad to fictitious RCBC accounts in the Philippines.
RCBC employees and Philippine nationals Maia Santos Deguito, Angela Ruth Torres, Lorenzo V. Tan, Raul Victor Tan, Ismael Reyes, Brigitte Capina, Nestor Pineda, and Romualdo Agarrado were involved in opening the fictitious accounts at RCBC branches in the Philippines. These accounts served as conduits to launder the stolen funds through the Solaire and Midas casinos, located in the Philippines, and operated by Bloomberry Resorts and Hotels (BRHI), a Philippine corporation,
As relevant here, the conduit accounts included five fictitious accounts (fictitious accounts) which were opened by Deguito and Torres and signed off on by Agarrado for defendant Kam Sin Wong,2 owner of EHL and good friend of Lorenzo V. Tan, RCBC‘s President and CEO. These accounts were opened on May 15, 2015 in the names of fictitious individuals to hold US dollars. Aside from an initial five-hundrеd-dollar deposit, the accounts remained dormant until the stolen funds were deposited on February 5, 2016.3 Notably, it is alleged that Wong “clearly [knew] that the stolen funds were coming” into the fictitious accounts, because he called RCBC‘s Deguito on February 5, 2016, and asked “whether a large deposit had been transferred into the [fictitious] Cruz Account.” When Deguito asked how Wong knew about the large deposit, Wong responded, “I told you, Lorenzo [Tan] knows this.”
On the date of the theft, RCBC opened another fictious account in the name of defendant Go, doing business as Centurytex Trading. The Centurytex paperwork was executed during a meeting between Deguito and Wong at a casino, a venue exempt from reporting requirements under Philippine anti-money laundering law. RCBC laundered nearly all of plaintiff‘s funds through the fictitious US dollar Centurytex account. The funds were then transferred into and between fictitious Philrem4 accounts. Importantly, as the fictitious accounts were opened in fictitious names, RCBC and the other banking related defendants, including Lorenzo Tan and Raul Tan (the Tans) and the individual defendants, were the only entities that could transfer funds in and out of the accounts.
Due to the suspicious nature of the transfers, RCBC‘s Settlements and Operations Groups placed holds on the fictitious accounts,
Upon discovery of the theft, plaintiff sent stop payment messages to RCBC. However, RCBC did not receive the messages until the next day because it signed out of the SWIFT server after the theft occurred. When RCBC‘s Settlements Department finally received the stop payment requests, it forwarded them to the Jupiter branch, where Deguito and Torres worked.
At the time the stop payment requests were forwarded to the Jupiter branch, $58.2 million remained in the fictitious accounts. Instead of placing an immediate hold on the accounts, Jupiter branch employees continued to process transfers and waited over six hours to plaсe the holds. This delay resulted in almost all the funds being transferred to the Centurytex account, an account RCBC did not freeze, despite it holding $42.9 million of plaintiff‘s stolen funds.
RCBC Head Office then sent SWIFT messages to plaintiff and its correspondent banks claiming it placed holds on “the remaining proceeds” even though it had not placed a hold on the Centurytex account. Over the next several days, the stolen funds in the Centurytex account were removed from RCBC.
By the time RCBC filed a Suspicious Transaction Report, over $80 million of plaintiff‘s funds had been stolen and transferred into Philrem RCBC accounts, converted into Philippine pesos, deposited into other banks, and distributed through various businesses, including EHL, the Centurytex account, and the Solaire and Midas casinos. The stolen funds were converted into casino chips at the Solaire Casino and given to players who used the chips to gamble for over a month.
Relevant Procedural History
Instant Action
Plaintiff commenced this action on May 27, 2020.5 The complaint asserted causes of action for conversion/theft/misappropriation;
Prior Motions to Dismiss
BRHI moved to dismiss the complaint pursuant to
On or about April 8, 2022, Supreme Court dismissed the complaint pursuant to
On appeal, we affirmed Supreme Court‘s determination and as relevant here, found that the court did not abuse its discretion in dismissing the action against EHL on forum non conveniens grounds. Specifically, we held that because “the court thoroughly considered each of the relevant factors in making its determination, there has been no abuse of discretion . . . even if we would have weighed those factors differently” ( Bangladesh Bank v Rizal Commercial Banking Corp., 2022 NY Slip Op 31167[U] [Sup Ct, NY County 2022], affd 216 AD3d 590 [1st Dept 2023] [RCBC I] [internal quotation marks and citation omitted]).
Instant Motions to Dismiss
RCBC moved to dismiss the complaint pursuant to
The Tans moved to dismiss the complaint pursuant to
Individual defendants Reyes, Pineda, Agarrado, and Capina also moved to dismiss the complaint pursuant to
Lastly, defendant Wong moved to dismiss based on forum non conveniens grounds because Supreme Court dismissed the action against EHL on that basis. Wong argued that the action should be dismissed against him for the same reason EHL‘s motion was granted. In the alternative, he requested that the action be stayed pending resolution of the proceedings in the Philippines.
The Court also found that it had personal jurisdiction as to RCBC under
Discussion
Forum non conveniens
Forum non conveniens is a common-law doctrine that presumes jurisdiction (Bader & Bader v Ford, 66 AD2d 642, 647 [1st Dept 1979], appeal dismissed 48 NY2d 649 [1979] [“[i]n applying the doctrine of forum non conveniens, . . . the existence of jurisdiction . . . is not dispositive. Forum non conveniens presumes the fact of jurisdiction . . .“]; Estate of Kainer v UBS AG, 175 AD3d 403, 403-404 [1st Dept 2019], affd 37 NY3d 460 [2021]; Shin-Etsu Chem. Co. v ICICI Bank Ltd., 9 AD3d 171, 176 [1st Dept 2004]). Thus, the initial question before this Court is whether Supreme Court had the discretion to deny the RCBC defendants’ motion to dismiss the complaint on forum non conveniens grounds when it had already granted
“When the court finds that in the interest of substantial justice the action should be heard in another forum, the court, on the motion of any party, may stay or dismiss the action in whole or in part on any conditions that may be just. The domicile or residence in this state of any party to the action shall not preclude the court from staying or dismissing the action.”
A plaintiff‘s choice of forum should rarely be disturbed, even when plaintiff is not a New York resident (see OrthoTec, LLC v Healthpoint Capital, LLC, 84 AD3d 702, 702 [1st Dept 2011]). Thus, a defendant seeking dismissal on forum non conveniens grounds has a “heavy burden of establishing that New York is an inconvenient forum and that a substantial nexus between New York and the action is lacking” (Elmaliach v Bank of China Ltd., 110 AD3d 192, 208 [1st Dept 2013] [internal quotation marks omitted]).
In Pahlavi, the Court of Appeals listed several factors that a court should consider when exercising its discretion in determining whether to retain jurisdiction. These factors, none of which is controlling, include: (1) the burden on the New York courts; (2) potential hardship to the defendant; (3) the unavailability of an alternative forum in which plaintiff may bring suit; (4) whether both parties are nonresidents; and (5) whether the transaction from which the cause of action arose occurred primarily in a foreign jurisdiction (62 NY2d at 479). A court may also consider the location of potential witnesses and documents and potential applicability of foreign law (Shin-Etsu Chem. Co., Ltd., 9 AD3d at 177-178). Importantly, however, the doctrine is flexible and allows the court to make a discretionary determination based on the facts and circumstances of each case (Pahlavi, 62 NY2d at 479; Phat Tan Nguyen v Banque Indosuez, 19 AD3d 292, 294 [1st Dept 2005], lv denied 6 NY3d 703 [2006]).
Here, thе gravamen of the forum non conveniens dispute is whether Supreme Court abused its discretion in denying defendants’ motion to dismiss on forum non conveniens grounds based on the court‘s prior holding that New York was an inconvenient forum as to another defendant. Specifically, the RCBC defendants contend that this Court should exercise its independent discretion and dismiss the action, because Supreme Court‘s holding is an “about-face” that cannot be squared with its now-affirmed prior determination on forum non conveniens. We disagree.
When reviewing the motion court‘s exercise of discretion, we are “not limited to deciding that the nisi prius court abused its discretion, but may exercise such discretion independently” (Shin-Etsu Chem. Co., Ltd., 9 AD3d at 175 [internal quotation marks omitted]). However, we have long held that the motion court‘s determination should not be disturbed unless the court “improvidently exercised its discretion or failed to consider relevant factors” (Swaney v Academy Bus Tours of N.Y. Inc., 158 AD3d 437, 438 [1st Dept 2018]). Thus, our analysis focuses not on the result, but on whether the court thoroughly considered each of the relevant factors in making its determination, “even if we would have weighed those factors differently” (Estate of Kainer v UBS AG, 37 NY3d 460, 467 [2021]).
Here, Supreme Court‘s analysis details the factors it considered in making its determination, including defendants’ role in the theft; the strong New York nexus of the case because the theft reached into an account at the NY Fed which was located in New York City (see Elmaliach, 110 AD3d at 209; see also Georgia-Pacific Corp. v Multimark‘s Intl., 265 AD2d 109, 112 [1st Dept 2000] [denying motion to dismiss on forum non conveniens grounds because significant payments and diverted funds took place in New York]; that the case was not a burden on New York courts because the Commercial Division was created to host complex international cases (see Robert L. Haig, 2 New York Practice, Commercial Litig. in New York State Courts § 1:7 [5th ed. 2020]); and that the case involved the application of New York law (see Bacon v Nygard, 160 AD3d 565, 566 [1st Dept 2018]).
While the court recognized that litigating in New York would be a potential hardship, it concluded that much of the relevant evidence was in electronic form, and although entities in both
The court also considered the location of the witnesses and documentary evidence and found that this factor favored New York because the critical evidence of the fraudulent payment orders and the movement of the stolen funds into and out of correspondent accounts exists in New York. The court further considered that three of the four correspondent accounts are located in New York. Lastly, the court found that the Philippines was not a proper alternate forum because the action by RCBC against plaintiff in the Philippines had been dismissed, plaintiff otherwise had no connection to the Philippines, the filing fees would be significant, and jury trials arе not available for civil matters in the Philippines (Wilson v Dantas, 128 AD3d 176, 187-188 [1st Dept 2015], affd 29 NY3d 1051 [2017] [in the context of forum non conveniens, the absence of the right to trial by jury in the proposed alternative forum causes a potential hardship to the plaintiff]).
In consideration of Supreme Court‘s analysis, we find the RCBC defendants’ assertion that all Pahlavi factors point towards dismissal clearly without merit. Although defendants contend that the parties’ not being residents of New York is the most significant factor to be considered, we have consistently held that residence is not the sole determinative factor in this analysis (see Thor Gallery at S. DeKalb, LLC v Reliance Mediaworks (USA) Inc., 131 AD3d 431, 432 [1st Dept 2015]; American BankNote Corp. v Daniele, 45 AD3d 338, 340 [1st Dept 2007]; Bank Hapoalim (Switzerland) Ltd. v Banca Intesa S.p.A., 26 AD3d 286, 287 [1st Dept 2006] [a defendant‘s “heavy burden” remains despite the plaintiff‘s status as a nonresident]). Thus, while it is undisputed that none of the parties reside in New York or the United States, it was not an abuse of discretion for Supreme Court to consider that plaintiff has maintained significant assets in the NY Fed for over 50 years in making its determination (see generally OrthoTec, LLC, 84 AD3d at 702 [unless the balance is strongly in favor of the defendant, the plaintiff‘s choice of forum should rarely be
Further, it is true that some of the court‘s conclusions here do not align with its findings in the April 8, 2022 order granting EHL‘s motion to dismiss on the grounds of forum non conveniens (RCBC I). These inconsistencies, however, are explained by the record before us, which establishes they are a result of the court‘s determination that the underlying motions here focused on the initial theft of the $81 million from the NY Fed and the movement of the stolen funds to RCBC‘s correspondent banks in New York and Philadelphia (see Elmaliach, 110 AD3d at 209 [New York was proper forum when New York banking facilities were used to process wire transfers that injured Israeli plaintiffs]).9
With respect to defendant Wong, even if we were to assume, without deciding, that Supreme Court incorrectly determined that he waived forum non conveniens, his argument is unpersuasive for the same reasons outlined above. Despite Wong‘s contention that the causes of action against him are identical to the causes of action against EHL, retention of him individually in this action was not an abuse of discretion because plaintiff sufficiently alleges that he was involved in both the theft in New York and the money laundering.
Based on the foregoing, we find Supreme Court‘s determination to deny each defendant‘s motion to dismiss on forum non conveniens grounds was not an abuse of discretion. However, this determination only represents half of our inquiry, as a finding that it was proper for Supreme Court to deny defendants’ motions to dismiss on forum non conveniens grounds does not equate to a finding that Supreme Court had personal jurisdiction over all RCBC defendants. Indeed, as discussed in further detail below, plaintiff has failed to establish personal jurisdiction over Reyes, Pineda, Capina, and Agarrado.
Personal Jurisdiction
In opposing a motion to dismiss pursuant to
Here, we find that plaintiff has sufficiently established personal jurisdiction over RCBC and the Tans. However, even accepting as true the allegations as set forth in the complaint, plaintiff‘s opposition papers, and according plaintiff the benefit of every favorable inference, it has failed to make a “sufficient start” in demonstrating long-arm “conspiracy” jurisdiction over the individual defendants. Because plaintiff asserts jurisdiction under
CPLR 302(a)(2)
This Court has long recognized that a conspiracy is a type of agency and that “[t]he acts of a co-conspirator may, in an appropriate case, be attributed to a defendant for the purposes of obtaining personal jurisdiction over that defendant” under
Before addressing plaintiff‘s argument that New York has conspiracy jurisdiction over defendant, we must first consider defendants’ argument that plaintiff fails to state a claim for conspiracy (see Mosaic Caribe, Ltd. v AllSettled Group, Inc., 117 AD3d 421, 424 [1st Dept 2014] [personal jurisdiction does not exist over a nondomiciliary based on a conspiracy unless there is a valid conspiracy claim]). “[T]o establish a claim of civil conspiracy, the plaintiff must demonstrate the primary tort, plus the following four elements: (1) an agreement between two or more parties; (2) an overt act in furtherance of the agreement; (3) the parties’ intentional participation in the furtherance of a plan or purpose; and (4) resulting damage or injury” (Abacus Fed. Sav. Bank v Lim, 75 AD3d 472, 474 [1st Dept 2010] [internal quotation marks omitted]). As relevant here, defendants contend that plaintiff has failed to allege a prima facie case of conspiracy because the complaint contains bare, conclusory allegations which are insufficient to establish an agreement between the co-conspirators and fails to allege defendants’ intentional participation in the furtherance of a plan or purpose. We disagree.
Contrary to defendants’ assertions, we find that the complaint contains factual allegations from which such an agreement can be inferred. Namely, after the initial theft of plaintiff‘s funds, the money was laundered through RCBC accounts by RCBC employees (see FIA Leveraged Fund Ltd. v Grant Thornton LLP, 150 AD3d 492, 495 [1st Dept 2017]; Abrahami v UPC Constr. Co., 176 AD2d 180 [1st Dept 1991]). Further, defendants’ intentional participation in furtherance of the conspiracy can be inferred by the overt acts alleged to have been taken by them—i.e., providing the routing numbers for RCBC‘s correspondent accounts, transferring the funds to fictious accounts, and converting plaintiff‘s funds to pesos (see FIA Leveraged Fund Ltd., 150 AD3d at 495; Emerald Asset Advisors, LLC v Schaffer, 895 F Supp 2d 418, 432 [ED NY 2012]).
This, however, is not the end of our inquiry as to establish personal jurisdiction over a co-conspirator based on a conspiracy
As relevant here, plaintiff contends that the theft of $81 million from its bank account at the NY Fed constitutes a tortious act within this state. In SOS Capital v Recycling Paper Partner of PA, LLC (220 AD3d 25, 33, 37 [1st Dept 2023]), we reiterated that personal jurisdiction under
However, as noted above, for the purposes of conspiracy-based personal jurisdiction in New York, plaintiff must also allege specific facts warranting the inference that each defendant was a member of the conspiracy that resulted in the tortious act in New York (see In re Sumitomo Copper Litig., 120 F Supp 2d 328, 338-339 [SD NY 2000]; see also Lawati, 102 AD3d at 428-429). That is, the complaint must sufficiently allege the “requisite relationship between the defendant and its New York co-conspirators . . . by . . . showing
With regard to RCBC, the complaint sufficiently states its involvement in the conspiracy to establish conspiracy based personal jurisdiction under
Plaintiff has also sufficiently alleged Raul Tan‘s and Lorenzo Tan‘s membership in the conspiracy. As to the first requirement, the complaint alleges in detail how, as senior management, the Tans were aware of the conspiracy based on Lorenzo Tan‘s contacts with defendant Wong. Specifically, it alleges that Lorenzo Tan was a longtime friend of Wong and advised RCBC personnel to “take care of” Wong as a client of RCBC. The complaint further alleges Lorenzo Tan was not only aware the fictitious accounts were opened, but also chose to take no action, despite knowing that large amounts of money would be placed into these accounts. Similarly, it is alleged that Raul Tan knew the funds had come from New York becаuse he discussed the transfers and the respective holds with senior personnel.
Turning to the second requirement, whether the activities in New York benefitted the Tans, we find that the complaint contains factual allegations from which such benefit can be inferred. Namely, it alleges that managers and officials at RCBC were motivated by the prospect of significant fees and commissions, including those earned through the foreign exchange transactions completed by RCBC‘s Treasury Department. Thus, it follows that Lorenzo Tan, as President and CEO, stood to benefit financially from the fees RCBC generated through the exchange transactions, and Raul Tan, who was directly involved with the conversion of the funds to pesos, also stood to benefit.
As to the third requirement, it is also reasonable to infer that the hackers were working at the Tans’ direction, under their control, or on their behalf. As noted above, the complaint alleges that the Tans were aware of the torts being committed by the hackers in New York (see Lawati, 102 AD3d at 428). It further alleges that Lorenzo Tan was awarе there were going to be large infusions of funds into the fictitious accounts and that Raul Tan, as a member of senior management, directed the hold on plaintiff‘s funds be lifted shortly after it was put in place and despite being advised of the suspicious transactions from the Deputy Head of RCBC‘s Operations Group, thereby allowing plaintiff‘s funds to be routed through the fictitious accounts.
While the complaint also contains more generalized allegations that senior RCBC personnel signed-out RCBC‘s SWIFT
Based on the foregoing, we find that sufficient faсts warranting the inference of a conspiracy and RCBC and the Tans’ membership therein, have been demonstrated. However, the complaint does not sufficiently allege conspiracy jurisdiction over Reyes, Pineda, Capina, and Agarrado because there is no basis to infer that the theft in New York was to their benefit or that the hackers acted at their behest. Rather, the complaint simply alleges that Reyes, Pineda, and Capina allowed the hold on plaintiff‘s funds to be lifted at Raul Tan‘s direction and consulted with Deguito about the fictitious accounts. Similarly, the complaint only alleges that Agarrado signed off on the opening of the fictitious accounts created by Torres and Deguito prior to the theft occurring.
While plaintiff attempts to read the control element out of the conspiracy membership analysis, our holding in Wimbledon Fin. Master Fund, Ltd. v Weston Capital Mgt. LLC (160 AD3d 596 [1st Dept 2018]) does not stand for the proposition that conspiracy membership can be established without showing some extent of control over the in-state actor. Rather, in Wimbledon we simply found that the control element could be met by an out-of-state defendant‘s receipt of “hush money,” because it allowed for the reasonable inference that they exerted control to the extent that the fraud could not have been completed without their acquiescence to the misconduct (id. at 596-597).
However, no such inference can be made here with respect to the individual defendants. Simply put, plaintiff failed to allege facts sufficient to support New York conspiracy jurisdiction for these defendants under
CPLR 302(a)(1)
The jurisdictional inquiry under
The determination of what facts constitute “purposeful availment” under
Here, plaintiff sufficiently alleges that RCBC maintains correspondent accounts in New York and has for 60 years. The record on appeal also demonstrates that RCBC admitted that it uses these correspondent banks to facilitate commercial and trade payments (inward and outward remittances) in US dollars and that its correspondent banks in New York are strictly used to route funds out of the United States (see Licci v Lebanese Can. Bank, SAL, 20 NY3d 327, 339-340 [2012]; see also Averbach v Cairo Amman Bank, 2020 WL 486860, *7, 2020 US Dist LEXIS 10902 [SD NY, Jan. 21, 2020, No. 19CV0004 (GHW/KHP)] [deposits and movement of funds through correspondent accounts in New York is transacting business]). Thus, the quality of RCBC‘s contacts established a transaction of business in New York.
In reaching this conclusion, however, we are not suggesting that a defendant‘s maintenance of a correspondent account in New York is sufficient to exercise personal jurisdiction (see Licci, 20 NY3d at 336). Rather, in the case before us, the correspondent accounts were integral to the alleged theft, as they were used to effectuate the transfer of plaintiff‘s funds out of New York and to the Philippines, thereby satisfying the second prong of the analysis. Further, as the complaint alleges, the hackers’ first attempts to move the money out of the NY Fed were unsuccessful because they lacked the routing information for RCBC‘s correspondent accounts. However, once the routing information was again requested from and provided by RCBC, the transfers of the funds from the NY Fed to the correspondent accounts were processed. Thus, the “transaction and claim are not merely coincidental” (Rushaid, 28 NY3d at 323 [internal quotation marks omitted]), but rather the actions were purposeful and necessary to effectuate the alleged theft.
We are presented with much different circumstances when discussing
Although Supreme Court‘s order does not reflect a finding under
CPLR 302(a)(3)
The RCBC defendants also argue that personal jurisdiction is not available under
CPLR 302(a)(3)(ii)
“(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or
” “(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce . . . .”
To rely on
It has long been the position of this Court that, “[i]n the context of a commercial tort, where the damage is solely economic, the situs of commercial injury is where the original critical events associated with the action or dispute took place, not where any financial loss or damages occurred” (CRT Invs., Ltd. v BDO Seidman, LLP, 85 AD3d 470, 471-472 [1st Dept 2011]). As relevant here, RCBC contends that the “original critical events” were the original hacking of plaintiff‘s computer system and the setting up the fictitious accounts—events which defendant claims did not cause injury in New York. This argument is unavailing.
In support of its contention, defendant relies on this Court‘s holdings in Quad Capital Portfolio A LLC v AbbVie Inc. (201 AD3d 449, 450 [1st Dept 2022]), CRT Invs., Ltd. (85 AD3d at 471-472) and HH Trinity Apex Invs. LLC (210 AD3d at 476). However, these cases do not involve the theft of funds in New York, but, rather, stand for the proposition that personal jurisdiction cannot be obtained under
While plaintiff alleges that defendant created fictitious accounts outside of New York which were used to facilitate the theft of plaintiff‘s funds within New York, the record clearly
However, plaintiff has failed to sufficiently allege that the individual defendants were subject to New York jurisdiction under
CPLR 302(a)(3)(i)
Plaintiff also asserts jurisdiction over RCBC under
Due Process
Although each subsection of
As relevant here, both RCBC‘s and the Tans’ intentional participation in the conspiracy to divest plaintiff‘s funds at the NY Fed and use of RCBC‘s New York correspondent bank accounts to do so, satisfy the minimum contacts component of the due process inquiry. We recognize, of course, that RCBC is a foreign entity, and the Tans are foreign nationals, but find that modern technologies greatly reduce the burden of litigation in New York (see Licci ex rel. Licci v Lebanese Can. Bank, SAL, 732 F3d 161, 174 [2d Cir 2013]). We also find that New York has an interest in adjudicating the dispute, as the alleged theft was facilitated using New York‘s banking system, and when considering the remaining factors, maintaining a lawsuit here does not “offend traditional notions of fair play and substаntial justice” (see Rushaid, 28 NY3d at 331). Given the extent and nature of RCBC‘s and the Tans’ alleged involvement in the conspiracy, we find that jurisdiction over these defendants comports with due process.
Failure to State a Claim
In reviewing a motion to dismiss for failure to state a cause of action pursuant to
Affording the factual allegations set forth in the complaint every favorable inference, we find that the causes of action for money had and received, unjust enrichment, conspiracy to commit trespass to chattels, and fraud/fraudulent concealment, are sufficiently established by the pleadings.
However, the allegations sounding in conversion are insufficiently pleaded. According to the allegations in the complaint, plaintiff‘s funds went to correspondent banks, then to fictitious accounts. Once plaintiff‘s funds were sent to RCBC‘s correspondent accounts in New York and Philadelphia, they were no longer segregated but commingled with other deposits already in the accounts, and once moved into the fictitious accounts set up by certain of RCBC‘s employees they were commingled further. Because the funds were no longer specifically identifiable, as required for a conversion claim, the causes of action sounding in conversion should have been dismissed (see SH575 Holdings LLC v Reliable Abstract Co, L.L.C., 195 AD3d 429, 430 [1st Dept 2021]; Thys v Fortis Sec. LLC, 74 AD3d 546, 547 [1st Dept 2010]).
Conclusion
Accordingly, the order of the Supreme Court, New York County (Andrea P. Masley, J.), entered January 17, 2023, which, insofar as appealed from as limited by the briefs, denied the motions of defendants RCBC, Romualdo Agarrado, Nestor Pineda, Ismael Reyes, Brigette Capina, Raul Victor Tan, and Lorenzo Tan to dismiss the complaint as against them under
Order, Supreme Court, New York County (Andrea P. Masley, J.), entered January 17, 2023, modified, on the law, defendants Agarrado, Pineda, Reyes, and Capina‘s motions to dismiss for lack of in personam jurisdiction granted, the causes of action for conversion/theft/misappropriation (first cause of action), aiding and abetting conversion/theft/misappropriation (second cause of action), and conspiracy to commit conversion/theft/misappropriation (third cause of action) dismissed, and otherwise affirmed, without costs.
Opinion by Pitt-Burke, J. All concur.
Webber, J.P., Scarpulla, Pitt-Burke, Rosado, O‘Neill Levy, JJ.
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: February 29, 2024
PITT-BURKE, J.