ORDER
ELMO B. HUNTER, District Judge.
Before the Court is defendant’s Motion to Dismiss plaintiff’s complaint for lack of personal jurisdiction or, alternatively, to dismiss Count II of plaintiff’s complaint for failure to state a cause of action for conversion. Plaintiff has responded to defendant’s motion and has moved for an Order requiring defendant to pay plaintiff the reasonable expenses and attorneys’ fees incurred in deposing three of defendant’s employees in New York and in preparing plaintiff’s motion for an award of reasonable expenses and attorneys’ fees. The relevant facts will be briefly stated.
Plaintiff is a national banking association with its principal place of business located in Kansas City, Missouri. Defendant, on the other hand, is a bank chartered by the State of New York with its principal place of business located in New York, New York. Defendant maintains no office in Missouri nor does it retain any employees in Missouri. Furthermore, defendant does not maintain an agent in Missouri to receive service of process.
Ryan Mortgage Acceptance Corporation (“Ryan”) issued Collateralized Mortgage Bonds (the “Bonds”). Defendant did not participate in the marketing and sale of these bonds. According to defendant, these bonds were marketed by an underwriter who purchased the entire bond issue at a discount from Ryan and then resold the bonds to the public pursuant to the terms of the prospectus.
Defendant entered into an Indenture with Ryan dated October 3, 1983, whereby it agreed to act as trustee relative to the payment of the principal and interest owed to the bondholders by Ryan pursuant to the terms of the bonds. Ryan would deposit funds into an “interest” account established with defendant, and defendant would mail interest checks to the bondholders. Likewise, when the principal was to be repaid, Ryan would deposit funds into a “principal” account established with defendant, and, upon presentation of the bonds to the defendant by the bondholders, defendant would issue a check for the face amount of the bond.
On September 25, 1984, plaintiff purchased $500,000 of the bonds on behalf of one of its customers. Consequently, defendant mailed checks from New York to plaintiff in Missouri. According to defendant, its contacts with Missouri relative to this bond transaction were limited to correspondence and telephone calls.
Plaintiff asserts that Ryan redeemed the bonds on October 1, 1986. Plaintiff alleges that neither Ryan nor the defendant notified plaintiff of the redemption and that defendant retained the bond redemption funds for its own use. According to plaintiff, it did not receive the bond redemption proceeds from defendant until December 30, 1987, and was obliged to indemnify its customer for the reasonable earning value of those proceeds from the redemption date until that time. Plaintiff has asserted claims for Money Had and Received and for Conversion, seeking to recover damages in the amount of $41,012.33 plus interest.
I.
Defendant’s Motion to Dismiss
In considering a motion to dismiss for lack of personal jurisdiction over a nonresident defendant, a federal court sitting in diversity must engage in a two-step inquiry: first, whether state law confers personal jurisdiction over the defendant; and
second, whether such an assertion of jurisdiction is consistent with the due process clause of the fourteenth amendment.
Charles Schmitt v. Gran Prix Auto Wholesales, Inc.,
616 F.Supp. 1191, 1192 (E.D.Mo.1985). The party seeking to invoke federal jurisdiction bears the burden of establishing that personal jurisdiction does exist.
Id.
Missouri’s long-arm statute, which authorizes service over a nonresident defendant, provides in relevant part:
1. Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this state;
(2) The making of any contract within this state;
(3) The commission of a tortious act within this state;
(4) The ownership, use, or possession of any real estate situated in this state;
(5) The contracting to insure any person, property or risk located within this state at the time of contracting;
(6) Engaging in an act of sexual intercourse within this state with the mother of a child on or near the probable period of conception of that child....
3.
Only causes of action arising from acts enumerted in this section may be asserted against a defendant in an action in which jurisdiction over him is based upon this section
(emphasis added).
Mo.Rev.Stat. § 506.500 (Vernon Supp. 1989). Service of process under this statute is effective to extend jurisdiction over nonresident defendants to the limits allowed under the due process clause.
State ex rel. Deere & Co. v. Pinnell,
454 S.W.2d 889, 892 (Mo.1970) (en banc).
International Shoe Co. v. Washington,
326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), establishes that for personal jurisdiction to exist, “due process requires ... a defendant ... [to] have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Minimum contacts may give rise to “general” or “specific” personal jurisdiction.
Hunt v. Erie Insurance Group,
728 F.2d 1244, 1246 (9th Cir. 1984). When a State exercises jurisdiction over a nonresident defendant in a suit arising out of or related to the defendant’s contacts with the forum, the State is exercising “specific jurisdiction” over the defendant. Hel
icopteros Nacionales de Colombia v. Hall,
466 U.S. 408, 414 n. 8,104 S.Ct. 1868, 1872 n. 8, 80 L.Ed.2d 404, 411 n. 8 (1984). When, on the other hand, a State exercises personal jurisdiction over a nonresident defendant in a suit not arising out of or related to the defendant’s contacts with the forum, the State is exercising “general jurisdiction” over the defendant. 466 U.S. at 414 n. 9, 104 S.Ct. at 1872 n. 9, 80 L.Ed.2d at 411 n. 9. General personal jurisdiction requires that a nonresident defendant’s contacts with the forum be “substantial and continuous.”
See Hunt,
728 F.2d at 1246.
Plaintiff does not allege that this cause of action arises out of defendant’s contacts with the forum.
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ORDER
ELMO B. HUNTER, District Judge.
Before the Court is defendant’s Motion to Dismiss plaintiff’s complaint for lack of personal jurisdiction or, alternatively, to dismiss Count II of plaintiff’s complaint for failure to state a cause of action for conversion. Plaintiff has responded to defendant’s motion and has moved for an Order requiring defendant to pay plaintiff the reasonable expenses and attorneys’ fees incurred in deposing three of defendant’s employees in New York and in preparing plaintiff’s motion for an award of reasonable expenses and attorneys’ fees. The relevant facts will be briefly stated.
Plaintiff is a national banking association with its principal place of business located in Kansas City, Missouri. Defendant, on the other hand, is a bank chartered by the State of New York with its principal place of business located in New York, New York. Defendant maintains no office in Missouri nor does it retain any employees in Missouri. Furthermore, defendant does not maintain an agent in Missouri to receive service of process.
Ryan Mortgage Acceptance Corporation (“Ryan”) issued Collateralized Mortgage Bonds (the “Bonds”). Defendant did not participate in the marketing and sale of these bonds. According to defendant, these bonds were marketed by an underwriter who purchased the entire bond issue at a discount from Ryan and then resold the bonds to the public pursuant to the terms of the prospectus.
Defendant entered into an Indenture with Ryan dated October 3, 1983, whereby it agreed to act as trustee relative to the payment of the principal and interest owed to the bondholders by Ryan pursuant to the terms of the bonds. Ryan would deposit funds into an “interest” account established with defendant, and defendant would mail interest checks to the bondholders. Likewise, when the principal was to be repaid, Ryan would deposit funds into a “principal” account established with defendant, and, upon presentation of the bonds to the defendant by the bondholders, defendant would issue a check for the face amount of the bond.
On September 25, 1984, plaintiff purchased $500,000 of the bonds on behalf of one of its customers. Consequently, defendant mailed checks from New York to plaintiff in Missouri. According to defendant, its contacts with Missouri relative to this bond transaction were limited to correspondence and telephone calls.
Plaintiff asserts that Ryan redeemed the bonds on October 1, 1986. Plaintiff alleges that neither Ryan nor the defendant notified plaintiff of the redemption and that defendant retained the bond redemption funds for its own use. According to plaintiff, it did not receive the bond redemption proceeds from defendant until December 30, 1987, and was obliged to indemnify its customer for the reasonable earning value of those proceeds from the redemption date until that time. Plaintiff has asserted claims for Money Had and Received and for Conversion, seeking to recover damages in the amount of $41,012.33 plus interest.
I.
Defendant’s Motion to Dismiss
In considering a motion to dismiss for lack of personal jurisdiction over a nonresident defendant, a federal court sitting in diversity must engage in a two-step inquiry: first, whether state law confers personal jurisdiction over the defendant; and
second, whether such an assertion of jurisdiction is consistent with the due process clause of the fourteenth amendment.
Charles Schmitt v. Gran Prix Auto Wholesales, Inc.,
616 F.Supp. 1191, 1192 (E.D.Mo.1985). The party seeking to invoke federal jurisdiction bears the burden of establishing that personal jurisdiction does exist.
Id.
Missouri’s long-arm statute, which authorizes service over a nonresident defendant, provides in relevant part:
1. Any person or firm, whether or not a citizen or resident of this state, or any corporation, who in person or through an agent does any of the acts enumerated in this section, thereby submits such person, firm, or corporation, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within this state;
(2) The making of any contract within this state;
(3) The commission of a tortious act within this state;
(4) The ownership, use, or possession of any real estate situated in this state;
(5) The contracting to insure any person, property or risk located within this state at the time of contracting;
(6) Engaging in an act of sexual intercourse within this state with the mother of a child on or near the probable period of conception of that child....
3.
Only causes of action arising from acts enumerted in this section may be asserted against a defendant in an action in which jurisdiction over him is based upon this section
(emphasis added).
Mo.Rev.Stat. § 506.500 (Vernon Supp. 1989). Service of process under this statute is effective to extend jurisdiction over nonresident defendants to the limits allowed under the due process clause.
State ex rel. Deere & Co. v. Pinnell,
454 S.W.2d 889, 892 (Mo.1970) (en banc).
International Shoe Co. v. Washington,
326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), establishes that for personal jurisdiction to exist, “due process requires ... a defendant ... [to] have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Minimum contacts may give rise to “general” or “specific” personal jurisdiction.
Hunt v. Erie Insurance Group,
728 F.2d 1244, 1246 (9th Cir. 1984). When a State exercises jurisdiction over a nonresident defendant in a suit arising out of or related to the defendant’s contacts with the forum, the State is exercising “specific jurisdiction” over the defendant. Hel
icopteros Nacionales de Colombia v. Hall,
466 U.S. 408, 414 n. 8,104 S.Ct. 1868, 1872 n. 8, 80 L.Ed.2d 404, 411 n. 8 (1984). When, on the other hand, a State exercises personal jurisdiction over a nonresident defendant in a suit not arising out of or related to the defendant’s contacts with the forum, the State is exercising “general jurisdiction” over the defendant. 466 U.S. at 414 n. 9, 104 S.Ct. at 1872 n. 9, 80 L.Ed.2d at 411 n. 9. General personal jurisdiction requires that a nonresident defendant’s contacts with the forum be “substantial and continuous.”
See Hunt,
728 F.2d at 1246.
Plaintiff does not allege that this cause of action arises out of defendant’s contacts with the forum. Instead, plaintiff contends that this Court may properly exercise general personal jurisdiction over the defendant, because defendant’s business activities within Missouri have been substantial and continuous.
The Court agrees that the exercise of general personal jurisdiction over defendant would not offend
due process.
However, the Court must still determine whether state law confers personal jurisdiction over the defendant even though this suit admittedly does not arise out of defendant’s extensive business activity within this forum. After reviewing the
pertinent case law, the Court finds that the Missouri long-arm statute prohibits the exercise of general personal jurisdiction over a nonresident defendant.
In
Cunningham v. Subaru of America, Inc.,
620 F.Supp. 646, 647 (W.D.Mo.1985), the plaintiff alleged that defendant Subaru had transacted business in Missouri, but he did not allege the cause of action arose from that business. The plaintiff contended that Missouri case law has abrogated the long-arm statute’s “arising from” language and that Missouri long-arm analysis and constitutional due process analysis are now coextensive.
Id.
The Honorable Howard Sachs concluded, after carefully reviewing relevant authority, that service was not authorized by the Missouri long-arm statute because “plaintiff ... demonstrated no factual connection between the litigation and the forum sufficient to sustain long-arm jurisdiction over defendant____”
The Honorable Russell Clark reached a similar conclusion in
Wooldridge v. Beech Aircraft Co.,
479 F.Supp. 1041 (W.D.Mo. 1979). Judge Clark determined that the unambiguous language of § 506.500 compels the “inescapable conclusion” that Missouri courts will exercise long-arm jurisdiction over a nonresident defendant only if some portion of its minimum contacts with Missouri gives rise to the action asserted.
Id.
at 1054. The fact that decisions such as
Cunningham
and
Wooldridge
have not been criticized by the Missouri courts indicates they represent a correct statement of Missouri law.
Thus, the Missouri long-arm statute is
not
effective to extend jurisdiction to the full limits allowed under the due process clause, because due process permits the assertion of general personal jurisdiction over a nonresident defendant.
In its Response to Defendant’s Reply to Plaintiff’s Suggestions in Opposition to Defendant’s Motion to Dismiss, plaintiff asserts that “the magnitude of the defendant’s Missouri business activities made reliance on long-arm jurisdiction unnecessary because this court may clearly assert
general
jurisdiction over [defendant].” This statement is erroneous. If a defendant is not physically located within the State of Missouri, valid service of process could only be made under the Missouri long-arm statute.
Wooldridge v. Beech Aircraft Corp.,
479 F.Supp. 1041, 1045 (W.D.Mo. 1979). Thus, personal jurisdiction can be exercised over defendant only pursuant to the Missouri long-arm statute, and that statute does not permit general personal jurisdiction. The Court therefore concludes that defendant’s challenge to personal jurisdiction is valid because service was not authorized by the Missouri long-arm statute.
II.
Plaintiffs Motion for Award of Expenses and Fees
Plaintiff moves pursuant to Rules 11 and 37(d), Fed.R.Civ.P., for an Order requiring defendant to pay attorneys’ fees and expenses in the amount of $3,644.44. The Court has jurisdiction to determine its
own jurisdiction.
English v. 21st Phoenix Corp.,
590 F.2d 723 (8th Cir.),
cert. denied,
444 U.S. 832, 100 S.Ct. 61, 62 L.Ed.2d 41 (1979). Thus, it is clear that the Court has jurisdiction over discovery conducted to aid in determining whether
in personam
or subject matter jurisdiction exists,
Wells Fargo & Co. v. Wells Fargo Express Company,
556 F.2d 406, 430 n. 24 (9th Cir. 1977), and can impose sanctions such as costs and fees for discovery abuse even in the absence of jurisdiction.
Ilan-Gat Engineers, Ltd. v. Antigua International Bank,
659 F.2d 234, 239 (D.C.Cir.1981). Accordingly, the Court has authority to rule on plaintiffs motion for attorneys’ fees and expenses even though it lacks
in personam
jurisdiction over defendant. In ruling on plaintiff’s motion, the Court makes the following findings of fact.
In response to defendant’s motion to dismiss for lack of
in personam
jurisdiction, plaintiff propounded a set of interrogatories to defendant designed to establish the extent of defendant’s activities within the State of Missouri. Mr. Michael Amodio, Vice President of defendant, answered the interrogatories and unequivocally denied under oath that defendant conducts any business in Missouri.
As a direct result of defendant’s unqualified denial of any business contact with Missouri, plaintiff’s counsel traveled to New York and deposed three of defendant’s employees. Plaintiff discovered through these depositions that defendant in fact has significant business contacts with the forum. It was not until after plaintiff uncovered this information through discovery that defendant filed Supplemental Answers to Plaintiff’s Interrogatories setting forth the correct responses.
Rule 11 is not properly used to sanction the inappropriate filing of papers where other rules more directly apply.
Zaldivar v. City of Los Angeles,
780 F.2d 823, 830 (9th Cir.1986). The instant case is more appropriately governed by Rule 26(g), Fed.R.Civ.P., which applies exclusively to discovery requests and responses. Rule 26(g) provides:
(g) Signing of Discovery Requests, Responses, and Objections. Every request for discovery or response or objection thereto made by a party represented by an attorney shall be signed by at least one attorney of record in the attorney’s individual name, whose address shall be stated. A party who is not represented by an attorney shall sign the request, response, or objection and state the party’s address. The signature of the attorney or party constitutes a certification that the signer has read the request, response, or objection, and that to the best of the signer’s knowledge, information, and belief formed after a reasonable inquiry it is: (1) consistent with these rules and warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law; (2) not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the costs of litigation; and (3) not unreasonable or unduly burdensome or expensive, given the needs of the case, the discovery already had in the case, the amount in controversy, and the importance of the issues at stake in the litigation. If a request, response, or objection is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the party making the request, response, or objection, and a party shall not be obligated to take any action with respect to it until it is signed.
If a certification is made in violation of the rule, the court, upon motion or upon its own initiative, shall impose upon the person who made the certification, the party oh whose behalf the request, response, or objection is made, or both, an appropriate sanction, which may include an order to pay the amount of the reasonable expenses incurred because of the violation, including a reasonable attorney’s fee.
The term “response” includes answers to interrogatories. Fed.R.Civ.P. 26(g) advisory committee’s note to 1983 amendment.
Although this circuit has not yet considered the interpretation and application of Rule 26(g), other circuits have concluded that district courts should look to case law under Rule 11 in interpreting Rule 26(g).
See Apex Oil Co. v. Belcher Co. of New
York, Inc.,
855 F.2d 1009, 1015 (2d Cir. 1988);
Insurance Benefit Administrators, Inc. v. Martin,
871 F.2d 1354, 1360 (7th Cir.1989). This conclusion is supported by the Advisory Committee’s Note which states that Rule 26(g) parallels the amendments to Rule 11. Fed.R.Civ.P. 26(g) advisory committee’s note to 1983 amendment.
The standard by which courts are to judge conduct challenged under Rule 11, and therefore under Rule 26(g), is one of objective reasonableness.
Hartman v. Hallmark Cards, Inc.,
833 F.2d 117, 124 (8th Cir.1987).
The rule as amended in 1983 is designed to discourage the filing of frivolous court papers or those that are “ ‘legally unreasonable, or without factual foundation, even though the paper was not filed in subjective bad faith.’ ”
Id.
The issue is whether the person who signed the pleading conducted a reasonable inquiry into the facts and law supporting the pleading.
O’Connell v. Champion International Corp.,
812 F.2d 393, 395 (8th Cir. 1987). Applying these standards to the facts in the instant case, the Court concludes that defendant has violated Rule 26(g) and that plaintiff is entitled to recover its expenses and attorneys’ fees incurred in deposing defendant’s employees and in preparing this motion.
The clear purpose of plaintiff’s interrogatories was to determine the extent of defendant’s contacts with the forum. Defendant’s initial response to the interrogatories was that “The Bank of New York does not conduct business in Missouri.” Defendant did not attempt to qualify its answers in any way, but instead absolutely and unequivocally denied any business contact with the forum. As a direct result of these responses, plaintiff was forced to depose three of defendant’s employees in New York. Defendant supplemented its answers to plaintiff’s interrogatories only after plaintiff discovered the true extent of defendant’s activities in Missouri. Several of these supplemental responses completely contradict defendant’s initial answers. The Court is compelled to find that defendant did not conduct either a reasonable inquiry or any inquiry at all into the facts underlying its initial responses to plaintiff’s interrogatories. No objective basis existed for defendant’s initial answers to plaintiff’s interrogatories.
Importantly, defendant provides the Court with no justification for its initial failure to properly respond to plaintiff’s interrogatories. Defendant suggests that it should be excused because it “is a very large banking enterprise which employs approximately eight thousand (8,000) employees.” This argument has no merit. The Court is not faced with a situation in which defendant qualified its initial responses because it lacked time to conduct an adequate investigation into the facts. Instead, defendant denied all contacts with Missouri without suggesting that because of size, etc., it needed additional time to fully respond to plaintiff’s interrogatories.
Defendant also seeks to avoid sanctions on the basis that the depositions conducted by plaintiff did not result in sufficient information to overcome defendant’s motion to dismiss. This argument is irrelevant. Defendant certified that it conducted a reasonable inquiry before initially answering plaintiff’s interrogatories. The ensuing events indicate defendant did not conduct any inquiry before responding to plaintiff’s interrogatories. Defendant made no attempt to supplement its answers until after plaintiff deposed its employees. Furthermore, defendant provides no justification for its conduct. Under these circumstances, the Court finds that an award of reasonable attorneys’ fees and expenses to plaintiff is appropriate.
Plaintiff’s counsel has provided the Court with a verified statement detailing the attorneys’ fees and expenses incurred in deposing defendant’s employees in New York and in preparing plaintiff’s motion for attorneys’ fees and expenses. The Court
finds that these attorneys’ fees and expenses are reasonable. The Court notes that defendant’s counsel did not certify defendant’s responses to plaintiff’s interrogatories as required by Rule 26(g). However, this does not prevent the Court from imposing sanctions upon defendant, The Bank of New York, because it certified its initial responses to plaintiff’s interrogatories when no objective basis existed for believing in the truth and accuracy of those responses.
Conclusion
It is hereby ORDERED that defendant’s Motion to Dismiss for lack of personal jurisdiction is granted. It is FURTHER ORDERED that, because the Court finds that defendant has violated the requirements of Rule 26(g), plaintiff is awarded attorneys’ fees and expenses in the amount of $3,644.44.
IT IS SO ORDERED.