Thani A.T. Al Thani v. Hanke

Background

Defendant Sherry Sims moved under Federal Rule of Civil Procedure 12(b)(2), which allows dismissal for lack of personal jurisdiction. The motion had been stayed while Sims’s bankruptcy proceedings and jurisdictional discovery were pending. After discovery, the Court directed the plaintiffs to file a supplemental opposition and Sims to file a supplemental reply. The plaintiffs filed their submission, but Sims did not file a reply despite receiving another final opportunity. Because Sims was representing herself, the Court addressed the merits rather than treating the motion as abandoned.

Personal Jurisdiction Analysis

The Court held that New York’s long-arm statute, New York Civil Practice Law and Rules section 302(a)(2), permitted jurisdiction over Sims. That provision applies when a nonresident commits a tortious act in New York personally or through an agent. Under the theory presented here, a co-conspirator can sometimes serve as an agent. The plaintiffs therefore had to show a probable conspiracy, facts supporting Sims’s membership in it, a tortious act in New York, and an agency relationship between Sims and Hanke.

The Court had previously found that the plaintiffs sufficiently alleged the first three requirements. The remaining question was whether jurisdictional discovery showed that Hanke acted in New York as Sims’s agent. The Court applied three factors: whether Sims knew her activities would have effects in New York, whether Hanke’s activity benefited Sims, and whether Hanke acted at Sims’s direction, control, request, or on her behalf.

The Court found the first factor satisfied because Sims testified that she knew Hanke traveled to New York for meetings, including a meeting with representatives of Plaintiff Mohammed Thani A.T. Al Thani. Text messages also showed Sims knew Hanke was traveling to New York and discussed an investment opportunity with him. In addition, Hanke sent Sims a copy of an agreement involving Al Thani’s funds that referred to insurance provided by New York, which the Court viewed as evidence of Sims’s awareness of New York-related activity.

The Court found the second factor satisfied because evidence showed that Sims and a trust received fees for issuing bonds to Hanke. Sims testified that the trust was paid $250,000 for issuing $10 million in bonds and $125,000 for issuing $5 million in bonds. She also testified that she used some of the trust’s funds for personal expenses. The Court further stated that Sims controlled the trust sufficiently that the trust could be treated as her alter ego, meaning the trust’s contacts could be attributed to Sims for the jurisdiction analysis.

The Court found the third factor satisfied based on evidence that Sims and Hanke essentially operated as a joint venture, which is a business arrangement in which two or more people jointly seek profit from a particular undertaking. Emails showed that Hanke asked Sims to act as his “Surety Provider” by supplying bonds for investors he located. Sims testified that she relied on agents to bring her deals, conduct diligence, and prepare bonds for issuance. The discovery also suggested that Hanke later sourced investments for which Sims issued bonds and arranged for money, which the plaintiffs maintained included their funds, to be transferred to the trust’s account.

Disposition

The Court concluded that the plaintiffs satisfied all three requirements for personal jurisdiction under section 302(a)(2). It also stated that jurisdiction under New York’s long-arm statute satisfied constitutional due-process requirements and that Sims had not shown that litigating in New York would be unreasonable. The Court denied Sims’s motion to dismiss for lack of personal jurisdiction. Judge John P. Cronan signed the order on June 27, 2023.