United States District Court, D. Connecticut
RULING ON MOTION TO DISMISS FOR LACK OF PERSONAL
R. Underhill United States District Judge.
Statek Corp. (“Statek”)-a California corporation
with principal place of business in Orange, California-sued
its erstwhile law firm, Coudert Bros. LLP
(“Coudert”)-a New York limited liability
partnership-for malpractice under English law. Statek's
claim arises out of Coudert's alleged failure to transfer
certain files from Coudert's London office to Statek in
1996. Coudert has moved to dismiss for lack of personal
jurisdiction. Because jurisdiction over Coudert is not
authorized by Connecticut's long-arm statute and would
not comport with the requirements of due process, I grant
Coudert's motion to dismiss.
Standard of Review
federal court to exercise personal jurisdiction over a
defendant, “three requirements must be met.”
Waldman v. Palestine Liberation Org., 835 F.3d 317,
327 (2d Cir. 2016). First, “the plaintiff's service
of process upon the defendant must have been procedurally
proper.” Id. Second, “there must be a
statutory basis for personal jurisdiction.”
Id. And third, “the exercise of personal
jurisdiction must comport with constitutional due process
principles.” Id. The due process test, in
turn, has two components: the “minimum contacts”
element “requires that the court determine whether a
defendant has sufficient minimum contacts with the forum to
justify the court's exercise of personal jurisdiction
over the defendant.” Id. (citing Daimler
AG v. Bauman, 571 U.S. ___, 134 S.Ct. 746, 754 (2014)),
and the “reasonableness” element “requires
the court to determine whether the assertion of personal
jurisdiction over the defendant comports with
‘traditional notions of fair play and substantial
justice' under the circumstances of the particular
case.” Id. (quoting Daimler, 134
S.Ct. at 754).
Federal Rule of Civil Procedure 4(k) provides for
“personal jurisdiction over a defendant . . . who is
subject to the jurisdiction of a court of general
jurisdiction in the state where the district court is
located, ” personal jurisdiction typically is
“determined in accordance with the law of the state
where the court sits.” Arrowsmith v. United Press
Int'l, 320 F.2d 219, 223 (2d Cir. 1963) (en banc).
Hence, the district court “look[s] first to the
long-arm statute of the forum state.” Friedman v.
Bloomberg LP, 871 F.3d 185, 191 (2d Cir. 2017). In
Connecticut, jurisdiction over foreign limited liability
partnerships is authorized by Conn. Gen. Stat. §
52-59b(a), Friedman v. Bloomberg LP, 180 F.Supp.3d
137, 144 n.3 (D. Conn. 2016), aff'd in part,
rev'd in part on other grounds, 871 F.3d 185, which
provides in relevant part:
[A] court may exercise personal jurisdiction over any
nonresident individual, foreign partnership or foreign
voluntary association, . . . who in person or through an
(1) Transacts any business within the state;
(2) commits a tortious act within the state . . .; [or]
(3) commits a tortious act outside the state causing injury
to person or property within the state . . ., if such person
(A) 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
(B) expects or should reasonably expect the act to have
consequences in the state and derives substantial revenue
from interstate or international commerce.
plaintiff bears the burden of showing that the court has
jurisdiction over the defendant.” Metro. Life Ins.
Co. v. Robertson-Ceco Corp., 84 F.3d 560, 566 (2d Cir.
1996). “[W]hen a motion to dismiss . . . is decided on
the basis of affidavits and other written materials, ”
the plaintiff may carry its burden “by pleading in good
faith . . . legally sufficient allegations of jurisdiction,
i.e., by making a ‘prima facie showing' of
jurisdiction.” MacDermid, Inc. v. Deiter, 702
F.3d 725, 727 (2d Cir. 2012); Whitaker v. Am.
Telecasting, 261 F.3d 196, 208 (2d Cir. 2001). In
assessing whether such a showing has been made, the
complaint's factual allegations are “assumed to be
true” and “construed in the light most favorable
to the plaintiff.” Deiter, 702 F.3d at 728;
Whitaker, 261 F.3d at 208. The court need “not
draw argumentative inferences in the plaintiff's favor,
” however, nor is it “required to accept as true
a legal conclusion couched as a factual allegation.”
Licci ex rel. Licci v. Leb. Can. Bank, 673 F.3d 50,
59 (2d Cir. 2012). At the pleading stage, the plaintiff must
plausibly allege “facts that, if credited by the
ultimate trier of fact, would suffice to establish
jurisdiction over the defendant.” Id.
procedural background to this case is quite complicated
(aptly deemed “tortured” by Statek). See
Mem. Opp'n Mot. Dismiss, Doc. No. 90, at 8 (“Mem.
Opp'n”). On October 28, 2005, Statek and its parent
company, Technicorp International II (“TCI II”),
filed suit in Connecticut Superior Court against Coudert,
Coudert partner Steven Beharrell, and others. See
Compl., Doc. No. 1-2, at 3, Statek Corp. v. Coudert Bros.
LLP, No. 3:05-cv-01889 (JBA) (“Statek
I”). Statek alleged the defendants had aided a
global money laundering, fraud, and tax evasion scheme
perpetrated by Statek's former directors, Hans Frederick
Johnston and Sandra Spillane. See Id. Johnston and
Spillane wrongfully diverted over $30 million from Statek and
TCI II and concealed it around the world. See Am.
Compl., Doc. No. 65, at 5. Beharrell, based in Coudert's
London office, served as Statek's outside counsel during
the period of the conspiracy.
1996, after Johnston and Spillane had been removed,
Statek's new directors “asked Coudert to provide
information and a complete copy of the files arising out of
and relating to the services Coudert had rendered.”
Id. Coudert sent some of its files to Statek but
withheld (and denied the existence of) others. See
Id. The missing files were subsequently discovered in
2004, after Coudert and Beharrell were subpoenaed by a
Bankruptcy Trustee appointed in connection with
Johnston's bankruptcy proceedings in
England. See Id. at 7-9. Statek alleges
that Coudert's wrongful concealment of the files
“breached . . . its professional and fiduciary duties
to its client Statek” and “hindered, delayed, and
frustrated [Statek] in its ability to discover and recover
assets that Johnston and Spillane had misappropriated.”
Id. at 11.
The first removal and remand
December 12, 2005,  twenty days after return date on the
summons, Beharrell removed the case to this court pursuant to
28 U.S.C. § 1441. Beharrell predicated jurisdiction on
diversity of citizenship, arguing that the defendants,
Coudert (a New York limited liability partnership) and
Beharrell (an English subject resident in England), were
completely diverse from the plaintiffs, Statek (a California
corporation with principal place of business in Connecticut)
and TCI II (a Delaware corporation). The amount in
controversy also exceeded $75, 000. See Notice of
Removal, Doc. No. 1, Statek I.
moved to remand on December 23, 2005, pointing out that the
citizenship of Coudert-a limited liability partnership-was
“based upon the citizenship of the individual
partners.” See Conntech Dev. Co. v. Univ. of Conn.
Educ. Props., 102 F.3d 677, 681 (2d Cir. 1996). Because
some of Coudert's partners resided in California, Coudert
was (like Statek) a citizen of California. Therefore, the
parties were not completely diverse, and jurisdiction was
lacking under 28 U.S.C. § 1332. See Mot.
Remand, Doc. No. 8, Statek I; cf. Strawbridge v.
Curtiss, 7 U.S. (3 Cranch) 267 (1806).
consented to remand on January 20, 2006. Doc. No. 18,
Statek I. On January 25, 2006, Judge Arterton
granted the motion to remand on consent. Doc. No. 19,
Statek I. The case was remanded to Connecticut
Superior Court on February 6, 2006.
The first removal and remand
state court, Coudert and Beharrell moved to dismiss on
grounds of lack of personal jurisdiction and forum non
conveniens. See Notice of Removal, Doc. No. 1, at 2.
The Superior Court directed the parties to conduct limited
jurisdictional discovery in order to establish whether
Connecticut was a proper forum. See id.
September 22, 2006, before the state court ruled on the
motions to dismiss, Coudert filed a Chapter 11 bankruptcy
petition in the Bankruptcy Court for the Southern District of
New York (the “Bankruptcy Court”), which
triggered an automatic stay of Statek's lawsuit in
Connecticut. See 11 U.S.C. § 362. Statek filed
a proof of claim in Coudert's bankruptcy case, in which
it sought the same relief as it did in the state court
action. See Notice of Removal, Doc. No. 1, at 2. On
March 23, 2007, Coudert removed the state court action to
this court pursuant to the bankruptcy removal statute, 28
U.S.C. § 1452. See id.
the second removal, the Bankruptcy Court granted relief from
the automatic stay in the bankruptcy proceedings “to
allow the parties to proceed to a final
determination/resolution of the pending Motions to
Dismiss” in this court. See Mem. Opp'n,
Doc. No. 90, at 9. I heard argument on the motions to dismiss
on February 21, 2008. See Minute Entry, Doc. No. 40.
At the close of the hearing, I granted the motions to dismiss
on the basis of forum non conveniens, without prejudice to
Statek refiling in another forum within 45 days. See
Mot. Hr'g Tr. (Feb. 21, 2008), Ex. D to Mot. Dismiss,
Doc. No. 86-5, at 17.
I granted the motions to dismiss solely on the basis of forum
non conveniens, I made a number of comments during the
hearing to indicate that I doubted that this court had
“personal jurisdiction over either the firm, ”
Coudert, or the “individual partner, ” Beharrell.
See Id. at 6. I noted that there was “a fairly
strong showing that the matter r[ose] out of activities that
occurred principally abroad, ” and that it was
“not apparent . . . why Connecticut ha[d] much, if any,
connection to th[e] dispute.” Id. The alleged
misconduct by Coudert and Beharrell “occurred almost
exclusively, if not exclusively[, ] in England, ” I
observed, id. at 8, and “Connecticut ha[d]
very little connection to the claims raised in the . . .
complaint.” Id. at 13. Even though Connecticut
“obviously ha[d] a greater connection to the underlying
fraud” committed by Johnston and Spillane, “[t]he
parties, witnesses[, ] and center of the activities” in
the present case were located in “England[, ] and that
would appear to be a natural place for this claim to have
been brought.” Id. at 13, 15. As a result, I
concluded that “[t]he defendants' amenability to
suit here [was] called into question.” Id. at
because of the “significant issues regarding personal
jurisdiction of the defendants . . . in Connecticut, ”
I determined that Connecticut was an inconvenient forum and
granted the motions to dismiss “without prejudice to
refiling in any forum within the next 45 days.”
Id. at 14, 17. “[I]f no refiling [were] made
or if the case [were] not brought to the Bankruptcy Court for
resolution within the next 45 days, ” I stated,
“then the dismissal would be with prejudice.”
Id. at 17. I denied as moot the Coudert's and
Beharrell's motions to dismiss on grounds of lack of
personal jurisdiction. Id. at 17-18. Five days
later, on February 26, 2008, the Clerk entered judgment in
favor of the defendants and closed the case. See
Doc. No. 41.
quickly moved to modify the dismissal order to ensure that
“the statute of limitations [did not] prevent [it] from
litigating [its] claims in another forum.” See
Ruling & Order, Doc. No. 49, at 1. Because “it was
not my intention, in dismissing the case, to prejudice Statek
with respect to the statute of limitations, ” I granted
Statek's motion, and modified the order of dismissal to
The dismissal is also contingent upon the defendants: (1)
waiving any statute-of-limitations defense based upon the
running of the statute of limitations during the period from
the commencement of the original case in Connecticut to the
date on which the plaintiffs re-file the case in the
alternate forum; and (2) stipulating to relief from the
automatic stay in the Coudert Bankruptcy to allow the
plaintiffs to re-file the case in accordance with this order.
Should the defendants fail to waive those defenses in writing
within the next 15 days, judgment will not enter in this
Id. at 2.
filed a response on March 20, 2008, in which it stated that
it “w[ould] not agree, for purposes of the statute of
limitations, to treat the commencement of a subsequently
filed action as though such action was commenced on the date
Plaintiffs commenced this action in the Connecticut Superior
Court, ” and would “not stipulate to relief from
the automatic stay in its bankruptcy case.” Resp., Doc.
No. 53, at 1. Coudert instead asked that I “enter
judgment of dismissal on the grounds of forum
non-conveniens or . . . based on the lack of personal
jurisdiction over Coudert.” Id. at 2. Because
Coudert would not agree to the conditions for dismissal, I
directed the Clerk to reopen the case. See Conf.
Mem. & Order, Doc. No. 59. Beharrell did agree to the
conditions, and I dismissed the claims against him
“without prejudice to Statek's refiling those
claims in London, England.” Order, Doc. No. 64, at 2.
moved the Bankruptcy Court for supplemental relief from the
stay so that Statek could amend its complaint against
Coudert. See Status Rep., Doc. No. 68, at 2. The
Bankruptcy Court granted the requested relief solely for the
purpose of amending Statek's complaint. See Id.
Statek then filed an Amended Complaint against Coudert in
this court on August 29, 2008, alleging that Coudert had
breached professional and fiduciary duties to Statek.
See Am. Compl., Doc. No. 65, at 11. The Amended
Complaint does not identify the jurisdiction under whose laws
the claims arise, but Coudert asserts-and Statek appears not
to contest-that the claims arise under English law.
See Mem. Supp. Mot. Dismiss, Doc. No. 86-25, at 8
the filing of the Amended Complaint-which was incorporated
into Statek's proof of claim in the Bankruptcy Court-no
other proceedings occurred in this court as a result of the
automatic stay in bankruptcy. See Status Rep., Doc.
No. 76, at 4. Due to that inactivity, on August 31, 2009, I
ordered the case administratively closed “without
prejudice to its pursuit in the United States Bankruptcy
Court and without prejudice to re-opening of th[e] case upon
motion.” Order, Doc. No. 77, at 1.
The bankruptcy proceedings
nearly a decade, Statek's case meandered through
bankruptcy court proceedings. The primary issue during that
time was which jurisdiction's choice-of-law rules
governed Statek's claim. Coudert argued that New
York's choice-of-law rules applied under In re Gaston
& Snow, 243 F.3d 599 (2d Cir. 2001), which held that
“bankruptcy courts confronting state law claims that do
not implicate federal policy concerns should apply the choice
of law rules of the forum state.” Id. at
601-02 (citing Klaxon Co. v. Stentor Electric
Manufacturing Co., 313 U.S. 487 (1941)). If New
York's choice-of-law rules applied, Coudert asserted,
then Statek's claim was barred under the applicable
statute of limitations.
originally contended that the Bankruptcy Court should apply
federal choice-of-law rules. See In re Coudert Bros.
LLP, 2009 WL 2928911 (Bankr. S.D.N.Y. Sept. 8, 2009)
(“Coudert I”), aff'd, 2010
WL 2382397, at *2 (S.D.N.Y. June 14, 2010)
(“Coudert II”), rev'd in part,
vacated in part, and remanded sub nom. Statek Corp. v. Dev.
Plan Specialists (In re Coudert Bros. LLP), 673 F.3d 180
(2d Cir. 2012) (“Coudert III”). After
the Bankruptcy Court rejected that position, Statek argued
for the first time on reconsideration that Connecticut's
choice of law rules applied under Van Dusen v.
Barrack, 376 U.S. 612 (1964), because “Connecticut
was the transferor forum to the Bankruptcy Court for the
Southern District of New York.” Coudert II,
2010 WL 2382397, at *2; see Van Dusen, 376 U.S. at
642 (when a civil action is transferred “for the
convenience of parties and witnesses, ” 28 U.S.C.
§ 1404(a), “the transferee district court must . .
. apply the laws of the State of the transferor district
court”). If Connecticut's choice-of-law rules
controlled, Statek argued, then the claim was not
choice-of-law dispute resulted in nine years of litigation
and two appeals to the Second Circuit; it has now led the
parties back to this court. The Bankruptcy Court initially
declined Statek's invitation to apply Connecticut's
choice-of-law rules, reasoning that Statek's Connecticut
lawsuit “was not subsequently transferred” to the
Bankruptcy Court, but rather was dismissed and refiled as a
proof of claim. Coudert I, 2009 WL 2928911, at *3.
On appeal, the District Court for the Southern District of
New York affirmed, Coudert II, 2010 WL 2382397, but
the Second Circuit reversed in part, vacated in part, and
remanded. Coudert III, 673 F.3d at 182-83. The
Second Circuit reasoned that “the practical effect of
filing a proof of claim in the bankruptcy court was to
transfer the case from Connecticut federal court to New York
federal court.” Id. at 182. Statek “did
not choose to litigate in New York, ” the Court noted,
but rather “exercised its venue privilege in favor of
Connecticut.” Id. at 190. “[T]o allow
the defendant Coudert to use a device of federal law (the
bankruptcy code) to choose the forum and accompanying choice
of law” would not only “be fundamentally
unfair” but also would conflict with the Supreme
Court's decision in Klaxon, 313 U.S. 487, which
aimed to “ensure that a plaintiff's choice of
forum within a given state w[ould] not be influenced by
choice of law considerations.” Coudert III,
673 F.3d at 189, 190-91. Therefore, the Second Circuit held
that the Bankruptcy Court should “apply the choice of
law rules of Connecticut, ” the state “where
[Statek's] underlying prepetition claim was filed.”
Id. at 182-83.
remand, the Bankruptcy Court adhered to its decision to
disallow Statek's claim. The Bankruptcy Court reasoned
that “Statek's reconsideration motion was the first
time Statek contended that Connecticut's choice of law
rules should apply, ” and that “well established
precedent strictly constru[ed] reconsideration motions to
prohibit a litigant from raising new legal theories that it
could have raised but did not until after it lost on its
original theories.” In re Coudert Bros. LLP,
2013 WL 4478824, at *1-*2 (Bankr. S.D.N.Y. Aug. 19, 2013)
(“Coudert IV”). The district court
affirmed, but the Second Circuit again reversed. Statek
Corp. v. Dev. Specialists (In re Coudert Bros. LLP), 809
F.3d 94, 98 (2d Cir. 2015) (“Coudert
V”). “In relying on a prior alternative
holding, ” the Second Circuit held, “the
bankruptcy court failed to effectuate Coudert
[III]'s mandate.” Id. at 100.
Because the Second Circuit was “fully aware of the
bankruptcy court's alternative holding” and
“did not” adopt it, the Court concluded that the
Bankruptcy Court's “‘new argument'
holding . . . was implicitly foreclosed by . . .
Coudert [III].” Id. at 101.
The Second Circuit reversed and remanded “with
instructions to: (1) reverse [the Bankruptcy Court's]
orders denying reconsideration, (2) vacate the Claim
Disallowance Order, (3) reinstate Statek's claim, and (4)
permit further proceedings.” Id. at 102-03.
The reopened proceedings
the second remand, the Bankruptcy Court lifted the Bankruptcy
Plan Injunction “to the extent necessary to allow [the
parties] to proceed to a final
determination/resolution” of this action, “and
the liquidation of Statek's Claim therein.”
See Order (June 1, 2017), Ex. I to Cohen Decl., Doc.
No. 90-1 at 139, 142-43. Statek then moved to reopen this
case on June 12, 2017. See Doc. No. 78. I granted
Statek's motion on June 15, 2017. Doc. No. 79.
case has belatedly returned to this court because the
parties' choice-of-law dispute appears to turn on whether
Coudert is subject to personal jurisdiction in Connecticut, a
matter that I declined to decide nine years ago. Under
Van Dusen, “when a case is transferred for
convenience under 28 U.S.C. § 1404(a), the law of the
transferor state is to be applied so long as the transferor
state could properly have exercised jurisdiction.”
Gerena v. Korb, 617 F.3d 197, 204 (2d Cir. 2010)
(citing Van Dusen, 376 U.S. at 635-39). Conversely,
“[i]f a district court receives a case pursuant to a
transfer under 28 U.S.C. § 1406(a), for improper venue,
or 28 U.S.C. § 1631, for want of jurisdiction, it
logically applies the law of the state in which it sits,
since the original venue, with its governing laws, was never
a proper option.”Id. (citing Levy v.
Pyramid Co. of Ithaca, 871 F.2d 9, 10 (2d Cir. 1989));
see SongByrd, Inc. v. Estate of Grossman, 206 F.3d
172, 181 (2d Cir. 2000) (Newman, J.) (“[I]n a
transferred action the law of the transferor jurisdiction
applies only if the transferor court has personal
jurisdiction.”) (internal citation omitted). Just as a
party cannot transfer a properly filed civil action to a
court that lacks personal jurisdiction, see Hoffman v.
Blaski, 363 U.S. 335, 343 (1960), a plaintiff cannot
file suit in a court without personal jurisdiction over the
defendant and then use “the ‘accident' of
federal diversity jurisdiction . . . to achieve a result in
federal court which could not have been achieved in the
courts of the State where the action was filed.”
See Van Dusen, 376 U.S. at 638. Were it otherwise,
“[p]laintiffs would . . . be encouraged to file their
actions in the federal district court where the state law was
the most advantageous, regardless of whether that district
court was a proper forum.” Martin v. Stokes,
623 F.2d 469, 472 (6th Cir. 1980); see also, e.g.,
Trierweiler v. Croxton & Trench Holding Corp.,
90 F.3d 1523, 1532 (10th Cir. 1996) (applying law of
transferee jurisdiction in such cases ...