U.S. BANK NATIONAL ASSOCIATION, AS SUCCESSOR (WELLS FARGO BANK, NA), AS TRUSTEE (REGISTERED HOLDERS OF CITIGROUP COMMERCIAL MORTGAGE TRUST 2007-C6, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2007-C6), ACTING BY AND THROUGH SPECIAL SERVICER CWCAPITAL ASSET MANAGEMENT LLC, Plaintiff-Appellant, v. BANK OF AMERICA N.A., Defendant-Appellee.
Docket No. 16-3560-cv
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
Decided: February 15, 2019
FOR THE SECOND CIRCUIT
August Term 2017
(Argued: November 8, 2017 Decided: February 15, 2019)
Docket No. 16-3560-cv
U.S. BANK NATIONAL ASSOCIATION, AS SUCCESSOR (WELLS FARGO
BANK, NA), AS TRUSTEE (REGISTERED HOLDERS OF CITIGROUP
COMMERCIAL MORTGAGE TRUST 2007-C6, COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 2007-C6), ACTING BY AND
THROUGH SPECIAL SERVICER CWCAPITAL ASSET MANAGEMENT LLC,
Plaintiff-Appellant,
v.
BANK OF AMERICA N.A.,
Defendant-Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK
Before:
LEVAL, LIVINGSTON, and CHIN, Circuit Judges.
Appeal by Plaintiff U.S. Bank National Association from orders of the
United States District Court for the Southern District of New York (Paul G.
District Court for the Southern District of Indiana, where it was instituted, and
granting judgment on the pleadings in favor of Defendant Bank of America N.A.,
by reason of untimeliness under the laws of New York. The district court in
Indiana had transferred the case to New York under
conclusion that the defendant was not subject to personal jurisdiction in Indiana.
Although we disagree with that conclusion (and therefore with the propriety of
the transfer under
motion to retransfer to Indiana, treat the original transfer as one made under
untimely under the laws of New York. The judgment is VACATED and the case
is REMANDED for further proceedings.
Judge CHIN concurs in a separate opinion.
COLLEEN M. MALLON (Gregory A. Cross, on the brief),
Venable LLP, Baltimore, Maryland, for Plaintiff-
Appellant.
ELIZABETH P. PAPEZ (Luke A. Connelly, Stephanie A.
Maloney, on the brief), Winston & Strawn LLP,
Washington, D.C. and New York, New York, for
Defendant-Appellee.
LEVAL, Circuit Judge:
In this suit for breach of contract, Plaintiff U.S. Bank National Association
appeals from orders of the United States District Court for the Southern District
of New York (Paul G. Gardephe, J.) denying its motion to retransfer the suit to
the United States District Court for the Southern District of Indiana, where it was
America N.A., by reason of the untimeliness of the suit under New York’s statute
of limitations. The district court in Indiana had transferred the case to New York
under
in Indiana because the Defendant (a nationally chartered bank and citizen of
North Carolina) was not subject to personal jurisdiction in Indiana.
We disagree with the Indiana district court’s conclusion that the Defendant
was not subject to the jurisdiction of the Indiana court, and therefore we
necessarily conclude that the Indiana court’s transfer to New York was not
authorized by
of Plaintiff’s motion to retransfer to Indiana, treat the original transfer as one
made under
dismissal rendered on the ground that the suit was untimely under the laws of
New York.
I. The Mortgage Loan Purchase Agreement
In 2007, Defendant Bank of America’s predecessor, LaSalle Bank N.A.,11
entered into a Mortgage Loan Purchase Agreement (the “MLPA”), for the sale of
a portfolio (of approximately 100 commercial mortgage loans) to an entity22
acting
for the benefit of an investment trust (the “Trust”), for which Plaintiff U.S. Bank
(a nationally chartered bank and citizen of Ohio) serves as Trustee. The MLPA
was supplemented by a Pooling and Servicing Agreement (the “PSA”), which
provided that the purchaser would deposit the loans into the Trust and assign all
of its rights under the MLPA to the Trust.
In the MLPA, the seller made representations and warranties regarding the
loans. These included Representation No. 8 (set forth in the margin),33
which
the mortgagor‘s ability to pay its obligations under the mortgage loan or would
materially and adversely affect the value of the mortgaged property.
The MLPA prescribes specific remedies available to the mortgagee in the
event of a “Document Defect or a Breach” of a representation. App. 79. Pursuant
to Section 3(c), the seller of the loan portfolio (Defendant’s predecessor)
undertook a commitment that, upon receipt of notice of a Document Defect or
Breach, it would:
cure such Document Defect or Breach . . . in all material
respects, or, if such Document Defect or Breach . . .
cannot be cured . . . , (i) repurchase the affected
Mortgage Loan at the applicable Purchase Price . . . , or
(ii) substitute a Qualified Substitute Mortgage Loan for
such affected Mortgage Loan . . . .
App. 79.
The PSA, in Section 2.03, similarly provides that, after receiving timely
notice of a Document Defect or Breach, the seller shall:
(i) cure such Document Defect or Breach, as the case
may be, in accordance with Section 3 of the applicable
[MLPA], (ii) repurchase the affected Trust Mortgage
Loan in accordance with Section 3 of the related
[MLPA], or (iii) within two (2) years of the Closing
Date, substitute a Qualified Substitute Mortgage Loan
for such affected Trust Mortgage Loan . . . .
App. 247.
II. The Indiana Loan
One of the items in the portfolio sold pursuant to the MLPA, was a $9
million loan (the “Loan”), which is the subject of this litigation, made in 2007 to
Women‘s Physicians Group, LLC. Repayment of the Loan was secured in part by
a mortgage on a two-story commercial building (the “Property”) (then owned by
the borrower/mortgagor Women‘s Physicians Group), which was located on a
hospital campus in Indiana. Women‘s Physicians Group had purchased the
Property from Galen Hospital Corporation (the “Hospital”) pursuant to a special
warranty deed. The deed includes two title exceptions that run with the
property: (1) a use restriction, which, absent the consent of the Hospital,
prohibits use of the Property otherwise than as an ambulatory surgery center and
medical offices, and (2) a right of first refusal in favor of the Hospital for any sale,
transfer, or assignment.
In 2012, Women’s Physicians Group lost the major tenant for the Property,
was unable to secure a new tenant that would use the Property in a manner that
conformed to the use restriction, and consequently defaulted on the Loan. On
MLPA, commenced a foreclosure action in Indiana state court against Women‘s
Physicians Group. The foreclosure court appointed a receiver, who similarly
failed to secure either a tenant or a waiver or modification of the deed
restrictions.
On October 18, 2013, Plaintiff-Trustee notified Bank of America that it had
violated MLPA Representation No. 8 and demanded that Bank of America cure
the violation or repurchase the Loan, as provided in the MLPA. Bank of America
did not do so.
III. The Proceedings Below
On September 12, 2014, Plaintiff, as Trustee, brought this action against
Bank of America in the Indiana district court, alleging breach of Representation
No. 8. Bank of America moved to dismiss the suit, or alternatively to transfer it to
the Southern District of New York, asserting that it was not subject to personal
jurisdiction in Indiana. The Indiana district court ruled that Bank of America was
not subject to personal jurisdiction in Indiana. The Indiana district court
transferred the case to the New York district court pursuant to
which authorizes a federal district court, on the basis of a “want of jurisdiction, . .
court . . . in which the action . . . could have been brought.”44 It is undisputed that
venue and jurisdiction are proper in the Southern District of New York.
Following the transfer, Plaintiff moved in the New York district court to
retransfer the case to the Indiana district court, arguing that, contrary to the
Indiana district court’s ruling, Bank of America was subject to the court’s
personal jurisdiction in Indiana on several different bases. The New York district
court denied the motion. In the meantime, Bank of America had moved in the
New York district court for judgment on the pleadings. The district court
granted that motion, concluding that Plaintiff’s claim for breach of contract was
time-barred under New York‘s six-year statute of limitations. The court entered
judgment in favor of Defendant Bank of America on September 22, 2016. This
appeal followed.
Plaintiff raises a number of arguments on appeal, including that the
Indiana district court erred in finding that Bank of America was not subject to its
jurisdiction, that the New York district court erred in refusing to retransfer the
case to Indiana, and that the New York district court accordingly should not
have entered judgment in favor of Defendant. We address these issues in turn.
I. Was Defendant Subject to the Personal Jurisdiction of the Indiana District
Court?
Plaintiff contends that, contrary to the Indiana district court’s ruling, Bank
of America was subject to personal jurisdiction in Indiana, both on the basis of
general jurisdiction (because of either its waiver or its extensive activities in
Indiana) and specific jurisdiction (because of the contractual representations it
undertook concerning real property in Indiana and the commitments it
undertook in the terms of the MLPA to perform acts in Indiana). We are
persuaded that Bank of America made itself subject to Indiana personal
jurisdiction in this case. Accordingly, we have no need to consider Plaintiff’s less
persuasive arguments that Bank of America was also subject to general Indiana
jurisdiction.
arm statute of the state in which it sits. See Chloé v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 163 (2d Cir. 2010). Indiana‘s long-arm statute authorizes courts to
exercise jurisdiction on any basis permitted by the U.S. Constitution. Advanced
Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796, 800 (7th Cir.
2014) (“Under Indiana‘s long-arm statute, Indiana state courts may exercise
personal jurisdiction on a number of prescribed bases, as well as ‘on any basis
not inconsistent with the Constitution of this state or the United States.’ ”)
(quoting Ind. R. Trial P. 4.4(A)). To comport with due process, a forum state
may exercise jurisdiction over an out-of-state corporate defendant only if the
defendant has “certain minimum contacts with [the State] such that the
maintenance of the suit does not offend ‘traditional notions of fair play and
substantial justice.’ ” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915,
923 (2011) (alteration in original) (quoting Int‘l Shoe Co. v. Washington, 326 U.S.
310, 316 (1945)). Specific jurisdiction over an out-of-state defendant “is available
when the cause of action sued upon arises out of the defendant‘s activities in a
state.” Brown v. Lockheed Martin Corp., 814 F.3d 619, 624 (2d Cir. 2016).
district court that falls outside this Circuit, we need not predict how our sister
circuit would decide the question, “since we are at liberty to decide for ourselves
what the Due Process Clause requires to sustain personal jurisdiction.” Chew v.
Dietrich, 143 F.3d 24, 30 (2d Cir. 1998); see also SongByrd, Inc. v. Estate of Grossman,
206 F.3d 172, 180-81 (2d Cir. 2000) (applying this circuit‘s case law to decide
whether Louisiana could exercise personal jurisdiction over a defendant).
Although we consider the decisions of our sister circuits, “we are permitted --
indeed, required -- to reach our own conclusions” on issues of federal law.
Desiano v. Warner-Lambert & Co., 467 F.3d 85, 90 (2d Cir. 2006); see also Rates Tech.
Inc. v. Speakeasy, Inc., 685 F.3d 163, 173-74 (2d Cir. 2012) (“[O]ur court is not
bound by the holdings -- much less the dicta -- of other federal courts of
appeal.”). But we “defer conclusively” to another circuit‘s decision when it
addresses a question of state law from a state within that circuit. Desiano, 467
1. Applicable Law of Specific Personal Jurisdiction
The Supreme Court has set out three conditions for the exercise of specific
jurisdiction over a nonresident defendant. See Bristol-Myers Squibb Co. v. Superior
defendant must have purposefully availed itself of the privilege of conducting
activities within the forum State or have purposefully directed its conduct into
the forum State.” Id. at 1785 (quoting J. McIntyre Machinery, Ltd. v. Nicastro, 564
U.S. 873, 877 (2011) (plurality opinion)). “Second, the plaintiff’s claim must arise
out of or relate to the defendant’s forum conduct.” Id. at 1786 (quoting
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). “Finally,
the exercise of jurisdiction must be reasonable under the circumstances.” Id.
(citing Asahi Metal Industry Co. v. Superior Court of Cal., Solano Cty., 480 U.S. 102,
113-114 (1987)).
At the first step, the minimum contacts inquiry is “satisfied if the
defendant has ‘purposefully directed’ his activities at residents of the forum.”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quoting Keeton v. Hustler
Magazine, Inc., 465 U.S. 770, 774 (1984)); see also Charles Schwab Corp. v. Bank of Am.
Corp., 883 F.3d 68, 82 (2d Cir. 2018) (“[M]inimum contacts . . . exist where the
defendant purposefully availed itself of the privilege of doing business in the
forum and could foresee being haled into court there.”).
conduct must create a substantial connection with the forum State” -- that is, the
“defendant [it]self” must create those contacts, and those contacts must be with
the “forum State itself,” not simply with persons who reside there. Walden v.
Fiore, 134 S. Ct. 1115, 1121-22 (2014) (citation omitted). Thus, although a
defendant’s contacts with the forum state may be “intertwined with [its]
transactions or interactions with the plaintiff or other parties . . .[,] a defendant’s
relationship with a . . . third party, standing alone, is an insufficient basis for
jurisdiction.” Id. at 1123; see also Bristol-Myers Squibb, 137 S. Ct. at 1783 (2017)
(same). It is “insufficient to rely on a defendant’s random, fortuitous, or
attenuated contacts or on the unilateral activity of a plaintiff with the forum to
establish specific jurisdiction.” Waldman v. Palestine Liberation Org., 835 F.3d 317,
337 (2d Cir. 2016) (quoting Walden, 134 S. Ct. at 1123) (internal quotation marks
omitted).
Nor is it sufficient for a plaintiff to show simply that a defendant’s actions
caused an “effect” in the forum state where the defendant has not “expressly
aimed its conduct at the forum.” Licci ex rel. Licci v. Lebanese Canadian Bank, SAL,
732 F.3d 161, 173 (2d Cir. 2013). And “mere injury to a forum resident” is
specific personal jurisdiction over a defendant even if defendant’s action could
be viewed as a “but for” cause of relevant events in forum state); accord Noboa v.
Barceló Corporación Empresarial, SA, 812 F.3d 571, 572 (7th Cir. 2016) (“[T]he
pertinent question is whether the defendant has links to the jurisdiction in which
the suit was filed, not whether the plaintiff has such links -- or whether the loss
flowed through a causal chain from the plaintiff’s contacts with the jurisdiction of
suit.”). Similarly, “the fact that harm in the forum is foreseeable . . . is insufficient
for the purpose of establishing specific personal jurisdiction over a defendant.”
In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 659, 674 (2d Cir. 2013).
Where the underlying dispute involves a contract, we use a “highly
realistic” approach and evaluate factors such as “prior negotiations and
contemplated future consequences, along with the terms of the contract and the
parties’ actual course of dealing.” Burger King, 471 U.S. at 479.
At the second step, we must be satisfied that “the litigation results from
alleged injuries that ‘arise out of or relate to’ those activities.” Id. at 472 (quoting
Helicopteros, 466 U.S. at 414). We have found that a claim arises out of forum
contacts when defendant’s allegedly culpable conduct involves at least in part
for the third step, once it is established that the defendant has minimum contacts
with the forum and the cause of action relates to or arises from those contacts, “a
court considers those contacts ‘in light of other factors to determine whether the
assertion of personal jurisdiction would comport with fair play and substantial
justice.’ ” Charles Schwab, 883 F.3d at 82 (quoting Licci, 732 F.3d at 170).55
2. Application
We conclude that Plaintiff met the requirements summarized above for
establishing specific Indiana jurisdiction over Defendant in this case. The central
tenets of Plaintiff’s theory of liability are that (i) Defendant breached
Representation No. 8 of the MLPA that there were no restrictions on the use of
the Indiana Property that would interfere with the mortgagor’s ability to make
its payments or adversely affect the value of the Property and (ii) Defendant
failed to comply with its contractual commitment to cure the breach. The
Property except for in a specified manner (which allegedly prevented the
mortgagor from obtaining a new tenant and thus caused it to default on payment
of the Loan), as well as the right of first refusal in favor of the Hospital (which
allegedly interfered with the mortgagor’s ability to pay the Loan and adversely
affected the value of the Property). Plaintiff alleges that Bank of America then
breached its commitments under Section 3(c) of the MLPA to either “cure such . .
. Breach . . . or, if such . . . Breach . . . cannot be cured, [to] (i) repurchase the
affected Mortgage Loan at the applicable Purchase Price . . . or (ii) substitute a
Qualified Substitute Mortgage Loan for such affected Mortgage Loan . ” App. At
79. Bank of America’s obligation to “cure” the breach, according to Plaintiff’s
theory, required it, among other possibilities, to perform some act in Indiana
such as obtaining the Indiana Hospital’s consent to relinquish the deed
restrictions that prevented the mortgagor from meeting its Loan obligations.
Defendant’s alleged breach of its contractual representations involved the
existence of restrictions on the use and value of Indiana Property. In addition, the
obligations expressly undertaken by Defendant under the MLPA were
purposefully directed toward residents of Indiana, and the suit arose from and
those commitments in the terms of the contract here in question, we see no
reason why obliging Defendant to litigate this claim in Indiana would offend
traditional notions of fair play or substantial justice, or be unreasonable.
II. Was the New York District Court Correct to Deny Plaintiff’s Motion to
Retransfer?
Plaintiff contends that if, as we have concluded, Bank of America was
subject to personal jurisdiction in the Indiana court, the Indiana court could not
lawfully transfer the venue of the action to New York under
statute authorizes transfer only for “want of jurisdiction.” Plaintiff contends
accordingly that the New York district court should have granted its motion to
send the case back to Indiana and that we should direct that this be done. We
disagree.
Such a ruling would fail to heed the Supreme Court’s sagacious warning in
Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988). Confronting a
similar circumstance, the Court cautioned, “[T]ransferee courts that feel entirely
free to revisit transfer decisions of a coordinate court threaten to send litigants
into a vicious circle of litigation,” culminating in a “perpetual game of
in that the potentially dueling transfer orders were entered by coordinate courts of
appeals, as opposed to a court of appeals reviewing of a transfer order of a district
court in another circuit, that distinction does not lessen the pertinence or
importance of the Supreme Court’s observation.
If we were to direct that the case be retransferred to Indiana, eventual
review by the Seventh Circuit might well result in a ruling that that circuit, and
not ours, is authoritative on the reach of jurisdiction of the Indiana courts, a
reaffirmance of the Indiana district court’s original ruling that Bank of America is
not subject to personal jurisdiction in Indiana, and a reinstitution of the original
transfer to the district court in New York. Whether and where it would end
could not be predicted. Such a scenario would be intolerable. Regardless of
which court is correct in its appraisal of the jurisdiction question, such a duel
between courts of transfers and retransfers would subject the parties to
unacceptably mounting expenses and delays. If such occurs, the federal court
system abjectly fails to perform its mission of deciding cases with reasonable
speed and efficiency at reasonable cost to the parties.
in rejecting Plaintiff’s motion for retransfer to Indiana. Citing Christianson, it
ruled that it would treat the Indiana court’s transfer of venue as the law of the
case. It reviewed the Indiana court’s decision with respect to the absence of
personal jurisdiction over Defendant in Indiana to the extent of ruling that it
found no clear error in that ruling, and thus denied the motion. While we are not
in complete agreement with the New York district court’s ruling (as explained
below) we entirely approve of its rejection of the motion to retransfer to Indiana.
Arguably, the standard for this court’s review of a transfer order of a
district court in a different circuit differs from the standard to be exercised by the
transferee district court. As we noted in SongByrd, 206 F.3d at 178 n.7, it would
be rare for the doctrine of the law of the case to commit a higher court to adhere
to a ruling of a lower court. Nonetheless, as noted above, for this court to require
retransfer to the Indiana district court based on our conclusion that the Indiana
court erred would give rise to the same unacceptable use of the parties as a ping-
pong ball as if the retransfer order were made by the transferee district court.
Plaintiff has not shown that litigating in New York would subject it to any great
inconvenience or unfairness. Allowing the case to remain in the Southern District
on a mistake of law, is a far lesser evil than subjecting the parties to the further
expense and delay of a retransfer, with the attendant risk of still further rounds
of transfers.
Because the transfer of venue was not available under
authorizes transfers only for want of jurisdiction, we think it is our best course to
treat the erroneous
the convenience of [the] parties and witnesses, in the interest of justice.”66 The
interest of justice and the convenience of the parties are served by a transfer
under
and attendant burdens that would result from having the case batted back and
The New York district court denied the Plaintiff’s motion to retransfer on the ground that the Indiana court’s transfer under
III. Did the New York District Court Err in Granting Defendant’s Motion for Judgment on the Pleadings under Rule 12(c) ?
In denying Plaintiff’s motion to retransfer to Indiana, the New York district court treated the Indiana court’s transfer order as lawful and efficacious not only as a transfer of venue to New York, but also as a determination that Bank of America was not subject to personal jurisdiction in the Indiana court and that the case would accordingly be decided under the laws of New York, the transferee state. The court explained, “If a district court receives a case pursuant to a transfer under . . .
A transfer under
Under the New York district court’s analysis, Indiana’s 10-year statute of limitations and its choice of law rules had no pertinence because the case was
IV. Response to Judge Chin’s Concurrence
Judge Chin’s concurring opinion expresses doubt whether Bank of America, as the successor entity following its merger with LaSalle, is subject to personal jurisdiction where LaSalle’s activities in relation to the events giving rise to liability would have subjected LaSalle to specific jurisdiction in a suit alleging breach of LaSalle’s contracts. Our first answer is that this issue is not in the case, having been forfeited, and/or waived, by Bank of America. See United States v. Quiroz, 22 F.3d 489, 490-91 (2d Cir. 1994) (argument not raised on appeal is deemed abandoned,
Because the issue is forfeited, we do not rule on it. We nonetheless observe that we can see no reason why, in a suit to enforce a merger partner’s contract, the entity that survives the merger should not be subject to personal jurisdiction in whatever court the actions of the merger partner in relation to the contract would have made the merger partner subject. Upon a merger between two (or more) corporations, each of the merger partners is deemed to survive in the merged entity, and the surviving entity is therefore liable for the liabilities of the corporations that joined in the merger. According to James D. Cox & Thomas Lee Hazen, 4 Treatise of the Law of Corporations § 22:8, “A distinguishing feature of a business combination carried out as a merger or consolidation is that by operation of law the surviving corporation is subject to all the liabilities of the acquired companies.” “In contrast,” the treatise explains, “when the combination is structured as an asset or stock purchase-sale, absent special circumstances, the acquiring company is subject only to those liabilities it has agreed to assume.” Id.
Furthermore, if the rule were as Judge Chin suggests, the rule would be subject to serious abuse: a corporation liable to suit in a state in which it does not wish to be sued could simply arrange a merger with a dummy corporation and thus avoid being subject to an undesired jurisdiction in the state where its actions incurred the liability.
We think Judge Chin has misread the New York precedent he cites. He relies on a short passage from BRG Corp. v. Chevron U.S.A., Inc., 82 N.Y.S.3d 798, 799 (N.Y. App. Div. 2018), which quotes from and adopts the rule stated in Semenetz
What those New York decisions reveal is that the answer to our question—whether liability as a successor in interest also entails being subject to personal jurisdiction where the actions of the predecessor would have made the predecessor subject—depends on the basis of the successor liability. The fair inference of the precedents is that, while successor liability based on acquisition of a predecessor’s assets does not necessarily make the defendant also amenable to jurisdiction where the predecessor’s actions would have made the predecessor subject to specific jurisdiction, the rule is different where the successor liability of the defendant derives from a merger with the predecessor. So far as appears from the decisions, none of Judge Chin’s cases involves successor liability based on merger; nonetheless, these decisions imply, indeed virtually state, that where the successor status is based on merger, the merged entity is subject to jurisdiction wherever its merger partner’s actions would have made the merger partner subject in a suit based on the merger partner’s liability.
The Schenin suit was brought in New York against an out-of-state corporation, Micro Copper Corporation (“Micro”), as successor to the liability of Vanura Uranium (“Vanura”), on the theory that Micro, having purchased the assets of Vanura, was not only liable for Vanura’s liabilities but also subject to jurisdiction where Vanura would have been subject. The court ruled that where the theory of successor liability is based on the successor’s purchase of the predecessor’s assets, the successor is not rendered subject to jurisdiction where the predecessor would have been subject in such a suit. The court, however, explicitly contrasted successor liability based on purchase of the predecessor’s assets with successor liability based on a merger with the predecessor, stating, “The insurmountable hurdle in plaintiff’s path [in seeking to subject the defendant to New York jurisdiction on the basis of its successor liability] is the sound distinction
In other words, while the holding of Semenetz was that successor liability on the basis of the “product line” or “continuing enterprise” exceptions to successor-nonliability does not confer on the successor the jurisdictional status of the predecessor, the decision explicitly recognizes that the rule is otherwise when the successor status results from merger with the predecessor.
As noted, Judge Chin cites a sentence from BRG, which relies on, and substantially quotes from, the Semenetz precedent. In BRG, the plaintiff brought a New York suit against Valero Energy Corporation (“Valero”), a foreign corporation, asserting liability to recover the costs of remediating environmental contamination that was caused by Valero’s “predecessor[] in interest.” BRG, 82 N.Y.S.3d at 798. The court of first instance had denied Valero’s motion to dismiss for lack of jurisdiction, reasoning that Valero “was the successor in interest to a company that was itself subject to personal jurisdiction in New York.” Id. at 799.
Nor is Judge Chin’s speculation supported by the Seventh Circuit case he cites. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773 (7th Cir. 2003). In Purdue Research, the plaintiff sued a French corporation in Indiana for breach of contract. The plaintiff’s contract, however, was not originally with the
CONCLUSION
For the reasons set forth above, we hereby (i) REVERSE the Indiana district court’s ruling that it lacked personal jurisdiction over Defendant; (ii) AFFIRM the New York district court’s denial of Plaintiff’s motion for retransfer to Indiana (treating the transfer order as one made under
I concur in the majority’s decision to affirm the denial of the motion to retransfer, and agree that the case should be remanded for further proceedings.
I am not persuaded, on the present record, that Indiana had specific personal jurisdiction over Bank of America. Bank of America’s contacts with respect to the relevant contracts were in New York only. The MLPA and PSA were negotiated, drafted, and executed in New York, and include New York choice-of-law clauses. Bank of America is subject to personal jurisdiction in Indiana, if at all, only because it is a successor-by-merger to LaSalle. While a successor-by-merger is “subject to all the liabilities of the acquired compan[y],” James D. Cox & Thomas Lee Hazen, 4 Treatise of the Law of Corporations § 22:8 (3d ed.), it is not always the case that an acquired company’s jurisdictional contacts can be imputed to the successor-by-merger. Even though Bank of America is liable on the agreements, that does not mean that Bank of America is necessarily subject to suit in Indiana because of LaSalle’s jurisdictional contacts. Compare BRG Corp. v. Chevron U.S.A., Inc., 82 N.Y.S.3d 798, 799 (App. Div. 4th Dep‘t 2018) (“The successor liability rule[s] deal with the concept of tort liability, not jurisdiction. When and if [successor liability] is found applicable, the
I do not believe, on the record before us, that it is clear that Indiana has specific personal jurisdiction over Bank of America. I would, therefore, leave the question of personal jurisdiction to the district court in the first instance to decide after it determines the choice of law question. See 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1069.4 (4th ed. April 2018 Update) (“[S]pecial problems are presented when [personal] jurisdiction over a defendant is justified by a related entity’s contacts with the forum . . . . The very nature of these often difficult issues makes their resolution extremely fact dependent.”).