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FIRST CHICAGO INTL. v. UNITED EXCH. CO.

February 20, 1987

First Chicago International, Plaintiff,
v.
United Exchange Company, Ltd., et al., Defendants



The opinion of the court was delivered by: PARKER

 Barrington D. Parker, Senior District Judge:

 This case, together with an application for writ of attachment, was filed by The First Chicago International Bank ("First Chicago"). That bank is a subsidiary of the First National Bank of Chicago ("FNBC"); its principal place of business is New York City. First Chicago sought to attach assets of a Jordanian currency exchange, United Exchange Company, Ltd. ("UNEXCO"), and of six officers or employees of UNEXCO ("individual defendants"). A business, Jamal Abu Samra Est., owned and operated by one of the individual defendants, Jamal Abu Samra, is also a named defendant. The individual defendants are, with one exception, all members of the Abu Samra family.

 The Court granted plaintiff's application for writ of attachment on February 19, 1986. At the time that the writ was served, Petra International had some $1 million on deposit in the name of UNEXCO, subject to a set-off in a like amount. A far lesser sum was recovered from the account of one of the individual defendants, Othman Abu Samra ("Othman").

 After plaintiff pursued limited discovery, defendants UNEXCO and Othman moved to dismiss the complaint for lack of personal jurisdiction, improper service of process, and forum non conveniens. Petra International and Petra joined in seeking dismissal on grounds of forum non conveniens, but otherwise conceded that this Court had jurisdiction over their persons. The remaining individual defendants moved to stay the action as to them, pending resolution of the dispositive motions. In addition, the moving defendants, along with several of the other individual defendants, sought a protective order, relieving them of the need to respond to further discovery pending consideration of the motions to dismiss.

 Oral argument on the dispositive motions was heard after extensive briefing by the parties. For the reasons set forth below, the Court grants the motions to dismiss of UNEXCO and Othman.

 Following oral argument, Petra International and Petra filed a supplemental motion to dismiss for failure to state a claim upon which relief could be granted. Those defendants argue that, just as plaintiff has not made a prima facie showing as to the jurisdictional facts at issue, neither has it demonstrated any facts implicating them in any wrongdoing as to the merits of its claims. The Court agrees that to hold that plaintiff has failed to demonstrate the existence of threshold jurisdictional facts is also to hold that it has failed to state a claim against Petra and Petra International. Accordingly, the Court grants the motion of those defendants to dismiss the complaint as to them under Fed. R. Civ. P. 12(b)(6). *fn1"

 In view of the disposition of the motions to dismiss, the pending motions to stay and for entry of a protective order are denied as moot.

 BACKGROUND

 The relationship between First Chicago and UNEXCO began in 1983, when UNEXCO opened a checking account with the bank. The two defendants assert without any challenge from plaintiff, that this relationship was entered into when a First Chicago representative solicited UNEXCO's business in Amman, Jordan. Plaintiff does not assert that UNEXCO representatives travelled to New York for the purpose of meeting with the bank's personnel concerning the account. Because UNEXCO had been a long-standing customer of Petra, First Chicago wired Petra in Amman, inquiring of UNEXCO's reputation and creditworthiness. Petra responded, by telex to First Chicago, indicating that both were good. First Chicago made a similar inquiry some time later and received the same response. Petra's telex replies made it clear, however that the representations were made without guarantee or responsibility.

 On or about October 1983, Petra opened the offices of Petra International in Washington. Sometime later, UNEXCO and several of the individual defendants opened checking accounts at Petra International. From June 1983 until mid-January 1986, UNEXCO's account at First Chicago saw a great deal of activity. In April 1985, First Chicago extended a $900,000 line of to UNEXCO credit in exchange for a cash time deposit of $1 million as security.

  Plaintiff alleges that between September and December 1985, defendants engaged in a check-kiting scheme involving the transfer of large sums of money between accounts at First Chicago and Petra International. See Affidavit of Richard J. Gilgan para. 10 (June 23, 1986), attached as Ex. A to plaintiff's opposition to defendants' motions to dismiss ("Gilgan Aff."). *fn2" Plaintiffs allege two distinct patterns of kiting activity. Under the first, UNEXCO drew checks on its account at First Chicago payable to Petra and to a Hani Kattan. Kattan and Petra then deposited the monies into their respective accounts at Petra International. Alternatively, Kattan might endorse checks over to Petra, which would then deposit the funds in its Petra International account. Petra then wired funds directly or indirectly into UNEXCO's account at First Chicago, while Kattan wrote checks on his Petra International account payable to Jamal Abu Samra Est., a business owned by one of the individual defendants, *fn3" which then endorsed them over to UNEXCO for deposit in its account at First Chicago. Gilgan Aff. paras. 11-13. Under the second pattern of activity, UNEXCO would write checks to various third-parties, who would then endorse them over to Jamal Abu Samra Est. for deposit in its account at Petra International. Jamal Abu Samra Est. would then reverse the process, resulting in deposits in UNEXCO's account at First Chicago. Gilgan Aff. paras. 14-16.

 Plaintiff contends that the above described transactions enabled defendants to make it appear as though their accounts at First Chicago and Petra International were far larger than they in fact were. As a result, says plaintiff, Jamal Abu Samra was able, at the end of December 1985, to draw 29 checks totaling some $28 million on the Jamal Abu Samra Est. account at Petra International, payable to various individuals. Those checks were then endorsed over to UNEXCO, which deposited them in its account at First Chicago. Plaintiff alleges that defendants knew at the time the checks were written that they were not backed by sufficient funds in the Jamal Abu Samra Est. account at Petra International. At about the same time that those checks were written, defendants Othman and Sami Abu Samra wrote numerous checks on the UNEXCO account at First Chicago.

 On January 3, 1986, plaintiff received notice from Petra International that it was dishonoring the 29 checks written on the Jamal Abu Samra Est. account. As a result, UNEXCO's account with plaintiff became overdrawn by over $23 million. Plaintiff asserts that Petra International "play[ed] an important role" in the success of the check-kiting scheme. Gilgan Aff. para. 22. Yet plaintiff's own description of that role indicates only that funds were transferred into and out of accounts maintained by others at Petra International. Id. Neither UNEXCO nor any of its principals maintained accounts at Petra International that were alleged to have been involved in the scheme. See id. paras. 11-16.

 Subsequent to the discovery of the overdraft, plaintiff met with members of the Abu Samra family to discuss the problem, as well as with representatives of Petra. Those discussions did not result in evidence that either Petra or Petra International were involved in the alleged check-kiting conspiracy.

 ANALYSIS

 I. Personal Jurisdiction

 In analyzing whether the forum court can properly exercise personal jurisdiction over a given defendant, one must look both to the local long-arm statute and to the provisions of the due process clause of the fourteenth amendment. The District of Columbia long-arm statute *fn4" provides that a local court may exercise jurisdiction over a non-resident defendant who transacts business or who causes tortious injury in the District by an act or omission in or outside of the District. D.C. Code ยง 13-423(a)(1), (3), (4). While the "transacting business" provision of the statute has been held to extend jurisdiction to the furthest limits recognized by due process, Chase v. Pan-Pacific Broadcasting, Inc., 617 F. Supp. 1414, 1420 (D.D.C. 1985); Mouzavires v. Baxter, 434 A.2d 988, 990-93 (D.C. 1981), the District of Columbia Court of Appeals has apparently reserved the question of whether any other provision is coextensive with due process. See Reuber v. United States, 242 U.S. App. D.C. 370, 750 F.2d 1039, 1050 n.13 (D.C. Cir. ...


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