Great Western Insurance Company v. Graham

Background

Great Western Insurance Company (GWI) asserted state common-law claims and claims under the Racketeer Influenced and Corrupt Organizations Act based on an alleged fraud involving more than $135 million in reinsurance assets. The pending motions involved Wilmington Savings Fund Society, FSB and Christiana Trust, referred to together as WSFS; Blue Elite Fund Ltd. (BEF Ltd.); and Blue II Ltd.

A previous order found that GWI had not initially made the required showing of personal jurisdiction over these defendants but allowed limited jurisdictional discovery. The defendants then submitted supplemental briefing limited to personal jurisdiction. The court also considered the defendants’ original motions under Federal Rules of Civil Procedure 12(b)(2), which addresses personal jurisdiction, and 12(b)(6), which addresses whether a complaint states a legally sufficient claim.

WSFS and Personal Jurisdiction

The court granted WSFS’s motion to dismiss for lack of personal jurisdiction. After jurisdictional discovery, GWI still had not shown that WSFS purposefully directed conduct toward New York that gave rise to GWI’s claims. The court rejected GWI’s reliance on communications with New York-based people, telephone calls, emails, account statements, payments, negotiations, and a New York choice-of-law provision. It concluded that these circumstances reflected contacts with people in New York or activities performed as part of WSFS’s trustee duties, rather than contacts that WSFS itself deliberately created with New York.

Because the court granted WSFS’s motion for lack of personal jurisdiction, it did not reach WSFS’s separate argument that GWI failed to state a claim.

BEF Ltd., Blue II, and Personal Jurisdiction

The court denied BEF Ltd.’s and Blue II’s motions to dismiss for lack of personal jurisdiction. GWI presented a February 2016 capital subscription letter concerning transfers from Series 2011-C into Blue II and from Blue II into BEF Ltd. The letter was signed by Graham as a director of both entities and listed his Manhattan address as the contact address for both. The court found that this evidence supported a reasonable inference that at least some allegedly improper transactions involving the entities were executed from or in New York. It therefore concluded that specific personal jurisdiction existed over BEF Ltd. and Blue II.

Failure to State a Claim

The court granted in part and denied in part BEF Ltd.’s and Blue II’s motion to dismiss for failure to state a claim. GWI brought against both entities claims for aiding and abetting breach of fiduciary duty, aiding and abetting fraud, and unjust enrichment.

The court granted the motion as to Count Four, the aiding-and-abetting-fraud claim. It denied the motion as to Count Two, the aiding-and-abetting-breach-of-fiduciary-duty claim, and Count Eleven, the unjust-enrichment claim. The court relied on its adherence to the earlier treatment of substantively identical allegations involving another defendant and stated that this approach avoided inconsistent rulings at the early stage of the litigation.

Disposition

The court granted WSFS’s motion to dismiss for lack of personal jurisdiction; denied BEF Ltd.’s and Blue II’s motions to dismiss for lack of personal jurisdiction; and granted in part and denied in part BEF Ltd.’s and Blue II’s motion to dismiss for failure to state a claim—granting it as to Count Four and denying it as to Counts Two and Eleven. The order resolved docket entries 239 and 242 and stated that the case remained referred to Magistrate Judge Sarah Netburn for general pretrial management.