On November 10, 1994, the Court heard oral arguments on two motions to dismiss filed respectively by the "Bronson defendants"
and the "Gibney defendants",
as well as a motion for judgment on the pleadings filed by the Gibney defendants. At the close of arguments the Court determined that it lacked personal jurisdiction over both sets of defendants. This opinion memorializes that bench ruling granting both motions to dismiss and denying as moot the Gibney defendants' motion for judgment on the pleadings.
Beginning in 1989, two clients of attorney Bronson, Towers Financial Corporation ("Towers") and its subsidiary TFC Funding Corporation ("TFC"), entered into a series of loans with plaintiff Bank of Cape Verde ("the Bank").
Plaintiff claims that an express condition of these loans was that Towers and TFC furnish a legal opinion confirming that they were not insolvent, that the warranties in the loan agreement were true, that the loan agreements conveyed valid lien interests in the assets of TFC, and that the receivables granted as collateral would be free of liens and encumbrances. Defendant Bronson furnished these opinions which were transmitted to the Bank via the Cape Verde Embassy and the Bank's counsel, both of which are located in the District of Columbia.
In early 1993, TFC and Towers defaulted on their loans, and on February 8, 1993, the Securities and Exchange Commission filed suit charging that Towers and TFC were the largest "Ponzi scheme" in American history. Both are now in bankruptcy and plaintiff is unable to recover its $ 20 million default judgment against them.
Several facts are undisputed. Both sets of defendants are New York based attorneys. Neither set of defendants have offices in the District of Columbia and there is no evidence that they have clients here. None of the defendants were ever physically present in the District of Columbia in connection with the transactions underlying this lawsuit. Bronson was never hired by the Bank to represent it. Any representations made by Bronson concerning the status of Towers and TFC were in connection with Bronson's representation of Towers and TFC. None of the research or documents upon which Bronson relied were located in the District of Columbia. Plaintiff claims jurisdiction based solely on the forwarding of opinion letters to the District of Columbia and several phone calls made by Bronson to the Cape Verde Embassy.
The Court must look to the District of Columbia long-arm statute, D.C. Code § 13-423,
to determine if plaintiff has met the threshold requirement of a prima facie showing of personal jurisdiction over defendants. Lott v. Burning Tree Club, Inc., 516 F. Supp. 913, 915 (D.D.C. 1980).
The most critical inquiry is not whether the nonresident defendant is physically present in the forum but whether the defendant's contacts with the forum are of such a quality and nature that they manifest a deliberate and voluntary association with the forum.
Mouzavires v. Baxter, 434 A.2d 988, 992 (D.C. 1981), cert. denied, 455 U.S. 1006, 102 S. Ct. 1643, 71 L. Ed. 2d 875 (1982).
In this case, we conclude that defendants' contacts with the forum are minimal and not of a quality that manifests a deliberate and voluntary association with the District of Columbia. Defendants never represented the Bank, nor did they benefit directly from the loan agreement between plaintiff and TFC and Towers. Any activity by defendants related to their representation of TFC and Towers, and any telephone calls or mailing to the District of Columbia occurred solely because the Bank requested that material be sent here. As stated by the D.C. Court of Appeals,
it is important in our analysis to recognize that the unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts.