United States District Court, D. Arizona
ORDER
H.
Russel Holland United States District Judge
KeyBank's
Motions to Dismiss
KeyBank
N.A. moves to dismiss plaintiffs' claims against it, or,
in the alternative, to transfer these claims to the Western
District of Washington.[1] This motion is
opposed.[2] KeyBank N.A. also moves to dismiss
Lawyers Title's crossclaims.[3] This motion is
opposed.[4] Oral argument has been heard on both
motions.
Background
Plaintiffs
are Joseph and Carla Thuney. Defendants are Lawyers Title of
Arizona, Inc.; Julie-Ann Helms; Helms & Helms, PLLC;
KeyBank N.A.; and JP Morgan Chase Bank, N.A.
Plaintiffs,
who reside in Washington state, allege that in 2017, they
were in the process of buying a retirement home in
Arizona.[5] Lawyers Title was to act as the escrow
holder for the transaction. Plaintiffs allege that during the
process of buying their retirement home in Arizona, they
received emails that appeared to be from Lawyers Title, but
were not.[6]Two of the forged emails provided
instructions for transferring plaintiffs' down payment
amount of $119, 555.73, instructions which plaintiffs then
provided to KeyBank.[7] The funds were to come from a Key Bank
account owned by Carla Thuney, which had been “opened
in 2010 by KeyBank personnel at the branch located at 12550
SE 82nd Avenue, Clackamas, Oregon.”[8] The wiring
instructions provided that the funds were to be wired to a
Chase Bank account in Houston, Texas.[9]
“The
wire transfers at issue in this case from the Thuney Account
were initiated by KeyBank personnel at the branch located at
1217 NE Highway 99, Suite 101, Vancouver,
Washington.”[10] On June 2, 2017, “KeyBank
personnel in Washington completed an internal wire transfer
request form” and the funds were thereafter wired to
the Chase account in Texas.[11]
Plaintiffs
allege that they alerted KeyBank on June 5, 2017 that they
suspected there had been fraud and that KeyBank attempted to
stop the transfer.[12] Plaintiffs allege that on June 19,
2017, they learned from KeyBank's fraud representative
that “Chase had released the funds to the individuals
or entities who had conducted the fraud” and that
“the funds were no longer
available.”[13]
On May
21, 2018, plaintiffs commenced this action. They assert
negligence, gross negligence, Electronic Funds Transfer Act,
and Arizona Consumer Fraud Act claims against KeyBank.
On July
19, 2018, Lawyers Title answered plaintiffs' first
amended complaint and asserted crossclaims against KeyBank.
Lawyers Title alleges that KeyBank “negligently
‘missed' several indicia of fraud when it processed
[p]laintiffs' wire request to the bogus account that
purported to belong to Lawyers Title.”[14] More
specifically, Lawyers Title alleges that KeyBank should have
noticed that “the domain name of the ‘fake'
Amanda Zalenski's e-mail was at a ‘g-mail'
account” rather than “a corporate
domain.”[15] Lawyers Title also alleges that
KeyBank should have noticed that “the e-mail address
for the ‘SoFi' loan broker was also at a
‘g-mail' account” rather than “a
corporate domain[.]”[16] And, Lawyers Title
alleges that KeyBank should have noticed that “the
beneficiary shown on the wire instructions was the
‘Olympus Group,' and not Lawyers
Title.”[17]
Lawyers
Title further alleges that
the first time that Key Bank attempted to transmit the
subject wire, it was rejected. Because it was rejected, Key
Bank called the telephone number which appeared on the
fraudulent wire instructions to confirm the instructions. The
person who answered the phone had a heavy accent, which
caused the Key Bank employee “concern.” Hence,
the Key Bank employee found a phone number for some random
Lawyers Title office on the internet, and called the office
to confirm that the company employed someone by the name of
Amanda Zalenski.[18]
Lawyers
Title alleges that “[b]ased on this investigation, Key
Bank apparently assuaged its ‘concerns' regarding
malfeasance[, ]” but Lawyers Title alleges that
“a reasonably prudent bank would have, at a minimum,
attempted to contact the ‘real' Amanda Zalenski. .
. .”[19] Lawyers Title supports these
allegations with the declaration of Judy Meyer, who is an
assistant escrow officer for Lawyers Title.[20] Meyer
avers that she spoke with Rob Eagar, a KeyBank branch
manager, who told her that “he called the phone number
which appeared on the fraudulent wire instruction, and asked
to speak with ‘Amanda Zalenski' to confirm the wire
instructions.”[21] Meyer further avers that “Mr.
Eagar told me that the woman with whom he spoke had a
‘foreign' accent, and that made him
‘suspicious' that something was
afoot.”[22] Meyer further avers that
Mr. Eagar told me that, because the “foreign”
accent of the woman with whom he spoke made him
“suspicious, ” he decided to conduct some
investigation. Specifically, he told me that he called
another office of Lawyers Title to confirm that Lawyers Title
did, in fact, employ someone named Amanda Zalenski in
Arizona. When that other office gave him that confirmation,
Mr. Eagar told me that he then processed the wire request,
and that the wire went through on this second attempt. During
my call with Mr. Eagar, I asked Mr. Eagar whether he also
asked the Lawyers Title office to confirm Ms. Zalenski's
phone number. . . . He told me that he did not do
so.[23]
Lawyers
Title asserts two crossclaims against KeyBank. In its first
crossclaim, Lawyers Title seeks a declaration that KeyBank
“is[] compelled by equitable principles to indemnify
and hold Lawyers Title harmless from the claims asserted by
[p]laintiffs, as well as from any attorney's fees and
costs that Lawyers Title might incur in defense of the claims
asserted by [p]laintiffs.”[24] Lawyers Title's
second crossclaim is a claim for indemnity and contribution,
which appears to be duplicative of the first crossclaim. In
short, Lawyers Title is seeking indemnification from KeyBank.
Pursuant
to Rule 12(b)(2), Federal Rules of Civil Procedure, KeyBank
now moves to dismiss plaintiffs' claims and Lawyer
Title's crossclaims on the ground that this court lacks
personal jurisdiction of KeyBank. In the alternative, KeyBank
moves to transfer plaintiffs' claims to the Western
District of Washington.
Discussion
“Where
defendants move to dismiss a complaint for lack of personal
jurisdiction, plaintiffs bear the burden of demonstrating
that jurisdiction is appropriate.” Dole Food Co. v.
Watts, 303 F.3d 1104, 1108 (9th Cir. 2002).
“Where, as here, the motion is based on written
materials rather than an evidentiary hearing, ‘the
plaintiff need only make a prima facie showing of
jurisdictional facts.'” Id. (quoting
Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir.
1990)). “In determining whether [a plaintiff has] met
this prima facie burden, uncontroverted allegations in [the]
complaint must be taken as true, and ‘conflicts between
the facts contained in the parties' affidavits must be
resolved in [the plaintiff's] favor. . . .'”
Ochoa v. J.B. Martin and Sons Farms, Inc., 287 F.3d
1182, 1187 (9th Cir. 2002) (quoting Am. Tel. & Tel.
Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588
(9th Cir. 1996)). “Additionally, any evidentiary
materials submitted on the motion ‘are construed in the
light most favorable to the plaintiff and all doubts are
resolved in [his] favor.'” Id. (quoting
Metro. Life Ins. Co. v. Neaves, 912 F.2d 1062, 1064
n.1 (9th Cir. 1990)).
“Where,
as here, there is no applicable federal statute governing
personal jurisdiction, the district court applies the law of
the state in which the district court sits.” Dole
Food Co., 303 F.3d at 1110. “Arizona's
long-arm statute provides that an Arizona court may exercise
personal jurisdiction over a nonresident defendant to the
maximum extent permitted under the Due Process Clause of the
United States Constitution.” Ariz. School Risk
Retention Trust, Inc. v. NMTC, Inc., 169 F.Supp.3d 931,
935 (D. Ariz. 2016). “The Constitution permits a court
to exercise personal jurisdiction over a nonresident
defendant if that defendant has at least ‘minimum
contacts' with the forum such that the exercise of
jurisdiction ‘does not offend traditional notions of
fair play and substantial justice.'” Id.
(quoting Int'l Shoe Co. v. Wash., 326 U.S. 310,
316 (1945)).
“[T]here
are two forms that personal jurisdiction may take: general
and specific.” Picot v. Weston, 780 F.3d 1206,
1211 (9th Cir. 2015). Plaintiffs argue that the court has
both general and specific jurisdiction of KeyBank. Lawyers
Title argues that the court has specific jurisdiction of
KeyBank, but if there is not specific jurisdiction, Lawyers
Title requests that it be allowed to take discovery as to
general jurisdiction.
“‘A
court may assert general jurisdiction over foreign
(sister-state or foreign-country) corporations to hear any
and all claims against them when their affiliations with the
State are so continuous and systematic as to render them
essentially at home in the forum State.'” BNSF
Ry. Co. v. Tyrrell, 137 S.Ct. 1549, 1558 (2017) (quoting
Daimler AG v. Bauman, 571 U.S. 117, 127 (2014)).
“The ‘paradigm' forums in which a corporate
defendant is ‘at home,' . . . are the
corporation's place of incorporation and its principal
place of business.” Id. (quoting
Daimler, 571 U.S. at 117). KeyBank is headquartered
in Ohio and its parent company is an Ohio
corporation.[25] And, as plaintiffs allege, its
principal place of business is in Ohio.[26]
But,
“[t]he exercise of general jurisdiction is not limited
to these [paradigm] forums; in an ‘exceptional
case,' a corporate defendant's operations in another
forum ‘may be so substantial and of such a nature as to
render the corporation at home in that State.'”
Id. (quoting Daimler, 571 U.S. at 139
n.19). KeyBank argues that this is not such an exceptional
case because it does not have substantial operations in
Arizona.
In
support of its argument, KeyBank offers evidence that it
“has neither any branches nor any ATMs in
Arizona” and that “it has no retail banking
presence in Arizona.”[27] Rather,
“KeyBank's retail footprint is focused in
Northwestern, Midwestern and Northeastern United
States.”[28] KeyBank does have
“one facility in Arizona that supports
commercial lending.”[29]This one facility
employs 21 people and KeyBank also has “7 independent
contractors who perform remote work from home in
Arizona.”[30] Most of the 21 employees
“support the bank's corporate real estate division
[which] does not offer any consumer products (like the
Thuneys' account), nor does it offer consumer services
(like the wire transfer at issue).”[31]“The
few remaining KeyBank employees in Arizona mostly work in
areas that provide backoffice support (technology,
recruiting, internal financial reporting, risk analysis, and
quantitative analytics). None have any responsibility for
sending or receiving wire transfers and none interface with
retail customers on wire transfers.”[32] KeyBank
also offers evidence that it has “1, 274 facilities
worldwide[, ]” “19, 282 employees” in the
United States, and “[l]ess than one percent of [its]
total assets - retail and corporate - are located in
Arizona.”[33]KeyBank argues this minimal presence
in Arizona does not make KeyBank “so heavily engaged in
activity in” Arizona “as to render [it]
essentially at home” there. BNSF Ry. Co., 137
S.Ct. at 1559 (citation omitted).
Plaintiffs
disagree and argue that KeyBank's use of Arizona courts
to prosecute claims is sufficient in itself to make a
prima facie showing of general jurisdiction. In
support of their contention that KeyBank is utilizing Arizona
courts to prosecute claims, plaintiffs submit PACER search
results which show that since 1990, KeyBank has been a
plaintiff in six federal bankruptcy cases.[34]
Plaintiffs also submit a list of state court cases which
shows that KeyBank has been a party in 20 state court cases
since 1998.[35] Plaintiffs request that the court
take judicial notice of this evidence. See United States
ex rel. Robinson Rancheria Citizens Council v. Borneo,
Inc., 971 F.2d 244, 248 (9th Cir. 1992) (quoting St.
Louis Baptist Temple, Inc. v. FDIC, 605 F.2d 1169, 1172
(10th Cir. 1979) (courts “‘may take notice of
proceedings in other courts, both within and without the
federal judicial system, if those proceedings have a direct
relation to matters at issue'”).
Assuming
that the court could take judicial notice of the fact that
KeyBank has been involved in some litigation in Arizona,
plaintiffs have not cited to any authority that stands for
the proposition that a defendant's prior use of the
forum's courts can be a basis for general jurisdiction.
But even if it could, these contacts with Arizona, some 26
cases over almost 30 years, are not sufficient to show that
KeyBank is “at home” in Arizona.
Plaintiffs
next argue that KeyBank's minimal presence in Arizona and
its use of courts in Arizona, taken together, are sufficient
to make a prima facie showing of general
jurisdiction. But even taken together, KeyBank's general
contacts with Arizona are not so “continuous and
systematic as to render [KeyBank] essentially at home
in” Arizona. BNSF Ry. Co., 137 S.Ct. at 1558.
Lawyers
Title suggests, however, that KeyBank is downplaying its
presence in Arizona and argues that if it were allowed to
conduct jurisdictional discovery, it may find evidence
sufficient to support the exercise of general jurisdiction.
Jurisdictional “[d]iscovery may be appropriately
granted where pertinent facts bearing on the question of
jurisdiction are controverted or where a more satisfactory
showing of the facts is necessary.” Boschetto v.
Hansing, 539 F.3d 1011, 1020 (9th Cir. 2008). But
“‘[w]here a plaintiff's claim of personal
jurisdiction appears to be both attenuated and based on bare
allegations in the face of specific denials made by the
defendants, the [c]ourt need not permit even limited
discovery. . . .'” Pebble Beach Co. v.
Caddy, 453 F.3d 1151, 1160 (9th Cir. 2006) (quoting
Terracom v. Valley Nat'l Bank, 49 F.3d 555, 562
(9th Cir. 1995)). It is not an abuse of discretion for the
court to deny a request for jurisdictional discovery that is
“based on little more than a hunch that it might yield
jurisdictionally relevant facts[.]” Boschetto,
539 F.3d at 1020.
In
support of its request to take jurisdictional discovery,
Lawyer Title offers a copy of KeyBank's website for its
income property group, which shows that the Western Regional
manager is Andrew Lucca, who has a 602 area code, which is an
Arizona area code.[36]Lawyers Title offers evidence that
Lucca is “[b]ased in Phoenix” and that “he
manages two sales teams that provide a full range of
financial service and products for commercial real estate
owners based in Alaska, Washington, Oregon, California, and
Arizona[.]”[37] Lawyers Title contends that this
evidence suggests that KeyBank's “major nerve
center for the western U.S. is located in
Phoenix[.]”[38] Lawyers Title argues that this
evidence is sufficient to support its request to take
jurisdictional discovery regarding the scope of KeyBank's
presence in Arizona.
The
fact that one of KeyBank's regional manager lives in
Arizona does not suggest that it has a “major nerve
center” located in Arizona. Lucca avers that
“[t]he Phoenix office supports the income property
group of KeyBank Real Estate Capital. That group is also
supported by an office in Seattle, Washington. I manage both
those offices.”[39] Lucca avers that he has five direct
reports in the Phoenix office, five in the Seattle office,
and one based in Los Angeles, California.[40] Lucca
further avers that “[t]he income property group is just
one part of KeyBank Real Estate Capital, which in turn is
just one part of KeyBank's corporate bank, which in turn
is just one part of KeyBank National
...