CITY OF TRENTON BOARD OF EDUCATION v. BANK OF AMERICA, N.A.

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

CITY OF TRENTON BOARD OF

EDUCATION,

Plaintiff, Civil Action No. 24-5647 (ZNQ) (JTQ)

Vv. OPINION

BANK OF AMERICA, N.A,, ef al,

Defendants.

QURAISHL, District Judge

THIS MATTER comes before the Court upon Defendant Umpqua Bank’s (“Umpqua”)

Motion to Dismiss for Lack of Jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2).

(the “Motion,” ECF No, 11.) Umpqua submitted a brief in support of their Motion (“Moving Br.,”

ECF No. 11-6), a Certification by Joseph R, McCarthy, Defendant’s lawyer (“Certification,” ECF

No, 11-1), and various exhibits. (ECF Nos. 11-2-11-4, 11-7.) Plaintiff Trenton Board of

Education (“Plaintiff”) filed an opposition “Opp’n Br.,” ECF No. 15), to which Umpqua

responded. (“Reply Br.,” ECF No. 17.) The Court has carefully considered the parties’

submissions and decides the Motion without oral argument pursuant to Federal Rule of Civil

Procedure 78 and Local Civil Rule 78.1.! For the reasons set forth below, the Court will GRANT

the Motion.

! Hereinafter, all references to Rules refer to the Federal Rules of Civil Procedure unless otherwise noted.

I, BACKGROUND AND PROCEDURAL HISTORY

A. PROCEDURAL HISTORY

Plaintiff filed its Complaint on April 25, 2024 against Umpqua, Bank of America North

America, 707 Premier Sports, LLC, and various other unknown entities in Mercer County Superior

Court. (“Compl.,” ECF No. 1-1.) Defendants collectively consented to removal and timely

removed the case to federal court pursuant to 28 U.S.C. § 1332, based on diversity jurisdiction.

(“Notice of Removal,” ECF No. 1.)

On May 16, 2024, Umpqua filed a Motion to Dismiss for Lack of Jurisdiction, (ECF No.

11.) Thereafter, on or around July 12, 2024, Defendant Bank of America notified the Court that it

reached a settlement in principle with Plaintiff. (ECF No. 19.) The Court therefore stayed the

claims against Bank of America. (ECF No. 20.) Plaintiff Bank of America continue to report

on their efforts to finalize their settlement. (ECF Nos. 21-24.)

B. FACTUAL BACKGROUND

As alleged in the Complaint, on July 29, 2022, Plaintiff issued and mailed a check (Check

No. 199401) from its school warrant account payable to “Smith Systems, P.O. Box 951181, Dallas,

TX 75395-1181” in the amount of $167,082.50 (the “check”). (Compl. 16.) The check, however,

was intercepted in the mail, the original payee (Smith Systems) was altered to “707 Premier Sports

LLC,” and the check was later deposited into an account maintained at Umpqua and paid by Bank

of America. (id. J 7.) On or about August 29, 2022, Plaintiff learned that the check had been

fraudulently altered. Ud. {| 9.)

The Complaint asserts nine causes of action, three of which are directed to Umpqua

(Counts Four, Five, and Eight). Because Umpqua is the only party to have filed the instant Motion,

2 The slatus of 707 Premier Sports in this litigation is unclear to the Court. It is not represented by counsel and there

is nothing on the docket to indicate that it has been served with process,

only the claims against it are relevant to this Motion. First, Plaintiff contends that Umpqua aided

and abetted fraud (Count IV) because “[c]ritical to the success of this fraudulent scheme was the

existence of a bank account” at Umpqua. Ud. J 28.) According to Plaintiff, by “opening the

Fraudulent Account on behalf of 707... [and by] allowing transfers of funds out of the Fraudulent

Account... Umpqua aided, abetted, and facilitated the fraudulent scheme of 707.” Ud. 429.) As

such, Umpqua was “negligent, grossly negligent, reckless, and/or acted in wanton and willful

disregard of the harm caused to” Plaintiff. Ud.)

Plaintiff also brings a cause of action for negligent supervision against Umpqua (Count V)

under the theory that certain employees were “acting under the direction and supervision of

Umpqua Bank, thereby assisting in the fraud.” (/d. { 32.) Moreover, as alleged, Defendant had

actual knowledge and was “willfully ignorant of the fact that the Fraudulent Account was being

utilized to steal money.” (/d.) Finally, Plaintiff brings a cause of action under the New Jersey

Fraudulent Transfer Act (“NJFTA”) against Umpqua (Count VIII? because it purportedly

transferred certain assets properly belonging to Plaintiff, contrary to the prohibitions of the NJFTA.

(id. 45-48.)

Ik. PARTIES’ ARGUMENTS

Umpqua moves to dismiss the Complaint for lack of personal jurisdiction under Rule

12(b\(2) because it lacks sufficient minimum contacts with New Jersey. (Moving Br. at 1.)

Umpqua argues that the Complaint fails to set forth any specific allegations concerning personal

jurisdiction over it in New Jersey. (Ud. at 2.) According to Umpqua, there is no general jurisdiction

over it because the Complaint points to no facts establishing it has contacts with New Jersey, “let

3 In addition to Umpqua, Count Bight was also brought against 707 Premier Sports and the unknown Defendants. As

stated, because this Motion only concerns Umpqua, the Court’s Opinion has no bearing on the remaining Defendants.

alone the required continuous and substantial contacts” required for general jurisdiction.’ (Id. at

6.) Moreover, Defendant argues that there is no specific jurisdiction because (1) there are no facts

alleged that Defendant purposefully availed itself or directed its activities in New Jersey, and (2)

conferring jurisdiction would violate fair play and substantial justice given that there is a high

burden on Defendant. Ud. 9-10.)

Plaintiff argues that there is specific jurisdiction over Defendant because Defendant

“accepted {the check] for deposit and presented [the check] for payment.” (Opp’n Br. at 5.)

Additionally, Plaintiff contends that “Umpqua knew that it was accepting for deposit and

presenting a check drawn on an account in New Jersey that had been fraudulently altered and then

transferring the proceeds from that fraudulently altered check to persons known,” (dd. at 6.)° In

Plaintiff's view, this is sufficient for Umpqua to reasonably anticipate being haled into Court in

New Jersey. (/d.) As an alternative to dismissal for lack of personal jurisdiction, Plaintiffrequests

jurisdictional discovery. (ed. at 1, 3).

APPLICABLE LAW

Pursuant to Rule 12(b)(2), a complaint is subject to dismissal for lack of personal

jurisdiction. See Fed, R. Civ. P. 12(b)(2). The plaintiff “bears the burden of demonstrating the

facts that establish personal jurisdiction.” Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d

Cir, 2002). “If the district court does not hold an evidentiary hearing, the plaintiff[] need only

establish a prima facie case of personal jurisdiction.” Mefcalfe v. Renaissance Marine, Inc., 566

Plaintiff does not dispute that there is no general jurisdiction over Defendant, (See Opp’n Br. at 1 ([Trenton Board

of Education] does not dispute that there is no general jurisdiction over Umpqua in this forum. Rather, [Trenton Board

of Education] submits that... . there is specific jurisdiction over Umpqua)).

5 In a reply brief, Defendant adds that (1) “Plaintiff has failed to present any jurisdictional facts to the Court,” in its

Complaint (Reply Br, at 4), (2) there was no purposeful availment, (3) Plaintiff's claims do not arise out of or relate

to Defendant's contacts, (id at 56), and (4) Plaintiff is not entitled to jurisdictional discovery because Plaintiff failed

Ud. a 3) motion for jurisdictional discovery and there are no fact disputes to be resolved through discovery.

F.3d 324, 330 (3d Cir, 2009) (internal quotations and citation omitted), And “[ijt is well

established that in deciding a motion to dismiss for lack of jurisdiction, a court is required to accept

the plaintiffs allegations as true, and is to construe disputed facts in favor of the plaintiff.” Toys

“R” Us, Ine. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir. 2003). Still, “[w]hile disputed issues

are construed in favor of the plaintiff, allegations may be contradicted by the defendant through

opposing affidavits or other evidence, at which point the plaintiff must respond with ‘actual proofs,

not mere ailegations.’” Am. Bd. of Internal Med. v. Rushford, Civ. No, 14-6428, 2015 WL

5164791, at *5 (D.N.J. Sept. 2, 2015) (quoting Patterson by Patterson v. FBI, 893 F.2d 595, 603

(3d Cir. 1990)). Additionally, “by accepting a plaintiff's facts as true when a motion to dismiss is

originally made, a court is not precluded from revisiting the issue if it appears that the facts alleged

to support jurisdiction are in dispute.” Carteret Sav. Bank, FA vy. Shushan, 954 F.2d 141, 142 n.1

(3d Cir. 1992),

“A federal court sitting in New Jersey has jurisdiction over parties to the extent provided

under New Jersey state law.” Miller Yacht Sales, Inc. v. Smith, 384 ¥.3d 93, 96 (Gd Cir. 2004)

(citing Fed. R. Civ. P. 4(e)). And “the New Jersey long-arm statute permits the exercise of personal

jurisdiction to the fullest limits of due process.” MO Indus., Inc. v. Kiekert AG, 155 F.3d 254,

259 (3d Cir. 1998) (citations omitted). “Personal jurisdiction under the Due Process Clause

depends upon the relationship among the defendant, the foram, and the litigation.” Jd. (internal

quotation marks and citation omitted). More precisely, “{t]he Due Process Clause of the

Fourteenth Amendment requires that nonresident defendants have ‘certain minimum contacts with

[the forum state] such that the maintenance of the suit does not offend traditional notions of fair

play and substantial justice.’” Afarten v. Godwin, 499 F.3d 290, 296 (3d Cir. 2007) (quoting □□□

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

“There are two distinct theories under which personal jurisdiction can arise: general and

specific.” Allaham vy. Naddaf, 635 F. App’x 32, 37-38 (3d Cir, 2015) (citing Grimes v. Vitalink

Comme’ns Corp., 17 F.3d 1553, 1559 (3d Cir. 1994)), “A court has general jurisdiction when a

defendant has ‘continuous and systematic’ contacts with the forum state.” /d. (quoting O’Connor

v. Sandy Lane Hotel Co., 496 F.3d 312, 317 Gd Cir, 2007)), Here, there is no dispute that there is

no general jurisdiction over Defendants. Therefore, the only potential basis for the exercise of

personal jurisdiction over Defendants is specific jurisdiction.

The inquiry as to whether a court may exercise specific jurisdiction over a non-resident

defendant is tripartite. See O’Connor, 496 F.3d at 317. First, “the defendant must have

‘purposefully avail[ed] itself of the privilege of conducting activities within the forum.” Jd.

(quoting Hanson vy. Denckla, 357 U.S. 235, 253 (1958)). “[I]t is essential in each case that there

be some act by which the defendant purposefully avails itself of the privilege of conducting

activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson,

357 U.S. at 253. The contacts must be the defendant’s own choice and not “random, isolated, or

fortuitous.” Keefon v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984); see Ford Motar Co. v.

Montana Eighth Jud. Dist. Ct., 592 U.S. 351, 359 (2021) (stating that for specific personal

jurisdiction, the defendant must have “deliberately ‘reached out beyond’ its home” (quoting

Walden v. Fiore, 571 U.S, 277, 285 (2014))). The unilateral activity of a third party cannot satisfy

the requirement that the defendant have minimum contacts with the forum state. See Hanson, 357

U.S, at 253 (noting that the mere “unilateral activity of those who claim some relationship with a

nonresident defendant cannot satisfy the requirement of contact with the forum State”),

Second, if there is purposeful availment by a non-resident defendant, a court may exercise

personal jurisdiction over that defendant only when a plaintiffs claims “arise out of or relate to

the defendant’s contacts” with the forum state. Bristol-Myers Squibb Co. vy. Superior Ct, 582 U.S.

255, 262 (2017); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984).

Third, if the non-resident defendant purposefully avails itself, and the plaintiffs claims

arise out of or relate to the defendant’s contacts with the forum state, “due process requires . . .

that the maintenance of the suit [against the defendant] does not offend ‘traditional notions of fair

play and substantial justice.’” Int’l Shoe, 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S.

457, 463 (1940)). And in determining whether the requirement to comport with “fair play and

substantial justice” is satisfied, courts evaluate several factors. Asahi Metal Indus. Co, v. Superior

Ct. of Cal., 480 U.S. 102, 113 (1987). A court must consider the burden on the defendant, the

interests of the forum State, and the plaintiff's interest in obtaining relief. It must also weigh in its

determination “the interstate judicial system’s interest in obtaining the most efficient resolution of

controversies; and the shared interest of the several States in furthering fundamental substantive

social policies.” Jd. (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292

(1980)).

IV. ANALYSIS

Here, for the reasons set forth below, the Court finds that it lacks specific personal

jurisdiction over Umpgua. The Complaint alleges that Umpqua is a financial institution with

offices in Washington, Oregon, Idaho, California, Nevada, Arizona, Utah, and Colorado. (Compl.

{ 3.) The Complaint identifies no corresponding office in New Jersey. Further, Umpqua is alleged

to be headquartered in Portland, Oregon, not New Jersey. (d.)

A liberal reading of the Complaint demonstrates to the Court that Umpqua’s only

connection to Plaintiff's claims and New Jersey in general is that Umpqua accepted a check issued

from New Jersey and later drew funds from the New Jersey account associated with that check.

This does not constitute purposeful availment. It was not Umpqua’s choice to direct its activities

to this state, nor did Umpqua target New Jersey. In the Supreme Court’s chosen parlance for

personal jurisdiction, it was merely “fortuitous” that Umpqua received a check issued from New

Jersey. Keefon, 465 US, at 774.

Given that the Court finds there is no purposeful availment, its analysis ends here. The

Court need not proceed to the remaining two prongs of the specific jurisdiction analysis-—whether

Plaintiff's claims arise out of or relate to Defendant’s contacts with the forum, and whether the

maintenance of the suit does not offend traditional notions of fair play and substantial justice.

Accordingly, the Court will! dismiss the claims against Umpqua for lack of personal jurisdiction.®

As a separate matter, the Court will also deny Plaintiff's request for jurisdictional discovery

as to Umpqua. Plaintiff has not articulated with sufficient particularity a basis for finding the

requisite contacts between Umpqua and New Jersey to justify the imposition of jurisdictional

discovery. Hurofins Pharma US Holdings v. BioAliance Pharma SA, 623 F.3d 147, 157 (3d Cir.

2010). Even if it had, Plaintiff's proposed discovery request pertains to the merits of its claims

rather than the basis for this Court’s jurisdiction over Umpqua. The type of discovery Plaintiff

seeks can be obtained by the various mechanisms for third-party discovery. Accordingly, the

Court finds that jurisdictional discovery is not warranted.

Although not discussed by the parties, the Court notes that there is no personal jurisdiction based on the Calder

effects test for personal jurisdiction either, See Calder v, Jones, 465 U.S. 783 (1984) (setting forth three factors that

allow a plaintiff to demonstrate the existence of personal jurisdiction: (1) the defendant committed an intentionai tort;

(2) the plaintiff felt the brunt of the harm in the forum such that the forum can be said to be the focal point of the harm

suffered by the plaintiff as a result of that tort; and (3) the defendant expressly aimed his tortious conduct at the forum

such that the forum can be said to be the focal point of the tortious activity). A fair reading of the Complaint

demonstrates to the Court that Counts Four and Five asserting aiding and abetting and negligent supervision against

Umpqua, respectively, do not read like intentional torts. Moreover, even if Count Eight, asserting a claim under the

NJFTA, qualifies as an intentional tort under Ca/der, Umpqua did not expressly aim its conduct to New Jersey.

Although the brunt of Plaintiff's harm is no doubt feit in New Jersey, because Plaintiff here fails to show that Umpqua

“manifest[ed] behavior intentionally targeted at and focused on the forum,” see Marten v. Godwin, 499 F.3d 290, 298

(3d Cir, 2007), Plaintiff fails to establish jurisdiction under the Ca/der effects test.

oO

V. CONCLUSION

For the reasons stated above, the Court will GRANT Defendant’s Motion, (ECF No. 11.)

The claims against Umpqua will be dismissed without prejudice. An appropriate Order will

follow.

en Ny □

C ~ ee

Date: December 12, 2024 . + □□

ef ORL j □

—ZSHID N. QURAISHI

( UNITED STATES DISTRICT JUDGE