Jaffer v. Standard Chartered Bank

301 F.R.D. 256, 88 Fed. R. Serv. 3d 1550, 2014 WL 2970179, 2014 U.S. Dist. LEXIS 89955
CourtDistrict Court, N.D. Texas
DecidedJuly 2, 2014
DocketCivil Action No. 3:13-CV-1674-G
StatusPublished
Cited by8 cases

This text of 301 F.R.D. 256 (Jaffer v. Standard Chartered Bank) is published on Counsel Stack Legal Research, covering District Court, N.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Jaffer v. Standard Chartered Bank, 301 F.R.D. 256, 88 Fed. R. Serv. 3d 1550, 2014 WL 2970179, 2014 U.S. Dist. LEXIS 89955 (N.D. Tex. 2014).

Opinion

MEMORANDUM OPINION AND ORDER

A. JOE FISH, Senior District Judge.

Before the court is the motion of the defendant, Standard Chartered Bank (“Standard”), to dismiss this case pursuant to Federal Rules of Civil Procedure 19(b), 12(e), and 12(b)(7) (docket entry 37). For the reasons stated below, the motion is granted.

I. BACKGROUND

The facts of this case were previously discussed in the court’s opinion dated January 28, 2014. See Memorandum Opinion and Order of January 28, 2014 at 1-3 (docket entry 31). To briefly review, the ease concerns an allegedly breached investment contract and access to funds in a Ghanaian bank account. The plaintiffs, Morris Jaffer and Anthony Fertitta, seek recovery of funds in an account with Standard Chartered Bank Ghana (“Standard Ghana”) and damages, both of which are sought from Standard, which does business in New York and has its principal place of business in London, England. Second Amended Complaint (“Complaint”) ¶¶ 13-15 (docket entry 24); Defendant’s Answer to Second Amended Complaint (“Answer”) ¶ 6 (docket entry 35). An associate of the plaintiffs, Brent Mann, requested information about the money in the bank account but was told by Standard’s Client Services Group that Standard did not have access to the account, and that Mann should contact Standard Ghana directly. See Exhibit 2 in Support of Second Amended Complaint (docket entry 24-2). Throughout this correspondence, Standard stated that in its records, it could only view the amount of the original credit to the account, but could not access information regarding what happened to the funds after the deposit. Id. Standard also repeatedly told Mann that the Ghanaian Financial Intelligence Unit had placed a hold on the money. Id.

The plaintiffs then filed this suit alleging breach of a depository contract and seeking recovery of the money in the Ghanaian bank account from Standard. Complaint ¶ 26. In answering the complaint and in the present motion, Standard objects to any claims made against it, and argues that Standard Ghana is an independent corporation and an indispensable party to the case under Rule 19(b) of the Federal Rules of Civil Procedure, over which the court cannot gain personal jurisdiction, meaning that the court should dismiss the ease. See Answer; Motion to Dismiss for Failure to Join an Indispensable Party (“Motion to Dismiss”) (docket entry 37).

Standard maintains that Standard Ghana is not a branch, but a legally and operationally separate entity. Answer ¶ 21. It asserts that Standard Ghana is a Ghanaian corporation, traded on the Ghanaian stock market, and only has client accounts within Ghana. Motion to Dismiss at 2, 5. Furthermore, Standard argues that while it may own roughly two-thirds of Standard Ghana’s outstanding ordinary shares, and Standard Ghana may use the “Standard Chartered Bank” brand name and logos, it has no control over the operations of Standard Ghana. Declaration of Andrew Willans ¶¶ 9-10, Exhibit 2 to Appendix in Support of Defendant’s Motion to Dismiss (“Defendant’s Appendix”) (docket entry 38-2). Both corporations keep sepa[259]*259rate accounting records, issue separate annual reports, have no common directors, are regulated by different regulatory bodies, and do not have access to each other’s depository records. Id. ¶ 11. Finally, Standard maintains no client accounts inside of Ghana, so it argues that no depository contract could exist between itself and the plaintiffs and that any such contract must exist with Standard Ghana. Declaration of Larry Fitzgerald ¶ 6, Exhibit 1 to Defendant’s Appendix (docket entry 38-1).

Thus, Standard filed the motion at issue, seeking to dismiss the suit due to an indispensable absent party, Standard Ghana. See generally Motion to Dismiss. The plaintiffs’ response centered around the email communications between Mann and Standard’s client services representative. See Plaintiffs’ Response to Defendant’s Motion to Dismiss (“Plaintiffs” Response) (docket entry 43). The plaintiffs allege that this activity forms the grounds for their lawsuit, and argue that Standard “obfuseate[s]” the facts of its involvement, hinting at incomplete corporate separateness, but they put forward no further evidence to support a piercing of the corporate veil. See id. at 2. The defendant filed a reply in support of its motion. See Defendant’s Reply in Support of its Motion to Dismiss (“Defendant’s Reply”) (docket entry 44). The motion to dismiss is now ripe for decision.

II. ANALYSIS

A. Procedural Issues

Earlier in this case, before it filed an answer, Standard filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, which was granted in part and denied in part. See Motion to Dismiss Second Amended Complaint (docket entry 28); Memorandum Opinion and Oi’der of January 28, 2014. Not included within that motion was a Rule 12(b)(7) failure to join an indispensable party defense that it later asserted in its answer to the plaintiffs’ second amended complaint, see Answer at 7, and now in the present motion to dismiss. See Motion to Dismiss.

In general, Rule 12(b) defenses must be brought in a single motion, before filing an answer, if a defendant seeks to raise them before answering. See Fed. R. Civ. P. 12(b), 12(g)(2). A Rule 12(b)(7) defense can otherwise be raised in a responsive pleading, a Rule 12(c) motion, or at trial. See Fed. R. Civ. P. 12(h)(2). In this case, Standard has already filed a 12(b) motion and an answer, but now attempts to file a 12(b)(7) motion to dismiss. While Standard may properly raise such an argument in a post-answer setting in a 12(c) motion, it has not done so here. Therefore, under Rules 12(g) and 12(h)(2), its motion is procedurally barred.

However, the court may raise, sua sponte, a Federal Rule of Civil Procedure 19 problem. The Supreme Court has held that:

[ T]he established practice of courts of equity [is] to dismiss the plaintiff’s bill if it appears that to grant the relief prayed for would injuriously affect persons materially interested in the subject matter who are not made parties ... and [this practice] may be enforced by the court, sua sponte, though not raised by the pleadings or suggested by the counsel.

State of Minnesota v. Northern Securities Company, 184 U.S. 199, 235, 22 S.Ct. 308, 46 L.Ed. 499 (1902). The Court reasoned that dismissal in these situations could be warranted because courts should seek to prevent injustice and future litigation stemming from absent parties with a material interest in a suit. See Northern Securities Company, 184 U.S. at 235, 22 S.Ct. 308; see also Shields v. Barrow,

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301 F.R.D. 256, 88 Fed. R. Serv. 3d 1550, 2014 WL 2970179, 2014 U.S. Dist. LEXIS 89955, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jaffer-v-standard-chartered-bank-txnd-2014.