Moussaoui v. Bank of Beirut and The Arab Countries

Background

Ali Mohamad Moussaoui sued Bank of Beirut and The Arab Countries, also known as BBAC Bank S.A.L., and Assaf Holding Company SAL. He alleged that he deposited more than $3 million in a fixed-term savings account with BBAC in Lebanon and that BBAC later refused to close the account and transfer the money to his account at Chase Bank. He also alleged that BBAC changed the account’s interest rate without his agreement. Assaf owned more than half of BBAC’s issued and outstanding shares.

Moussaoui alleged that BBAC had used correspondent bank accounts in New York for some transactions. BBAC maintained that its New York accounts were used to facilitate foreign-currency transactions for customers but that Moussaoui had not shown that a specific transaction through those accounts caused the alleged failure to release his funds. Moussaoui had also filed a related action against the defendants in Beirut, Lebanon, and that case remained ongoing.

Issues and analysis

The defendants moved to dismiss for lack of personal jurisdiction, an inconvenient forum, and failure to state a claim. The court addressed the jurisdictional issues first.

For personal jurisdiction, the court considered whether New York law authorized jurisdiction and whether exercising jurisdiction would comply with constitutional fairness requirements. The court rejected Moussaoui’s argument that the defendants’ correspondent accounts showed that they had conducted sufficient business in New York. Although the defendants maintained accounts there, Moussaoui did not identify a specific transaction through those accounts that formed part of the conduct underlying his claims. The court relied substantially on the Second Circuit’s decision in a similar case involving Lebanese banks and concluded that the alleged inability to withdraw U.S. dollars was caused by Lebanon’s banking crisis and related regulations, not by the defendants’ possession of correspondent accounts in the United States.

The court also rejected Moussaoui’s theory that it could exercise jurisdiction based on property in New York. This type of jurisdiction requires property in the state to be sufficiently connected to the claims, and the court found that Moussaoui had not shown that the funds allegedly held in New York were tied to his alleged injuries. The court further noted that no attachment order or property seizure was in place.

The court discussed the defendants’ argument that New York was an inconvenient forum and noted the banking agreement’s provision concerning Beirut courts. Because the parties disputed whether competing translations made that provision mandatory or permissive, and because the court found no personal jurisdiction, it did not decide whether the provision governed the dispute. The court also did not address the defendants’ arguments that the amended complaint failed to state a claim.

Jurisdictional discovery

Moussaoui alternatively sought permission to obtain discovery about jurisdiction. The court denied that request, reasoning that he had not made the initial showing required to support jurisdictional discovery and that discovery would require significant effort while being futile on the record before the court.

Disposition

Judge Edgardo Ramos granted the defendants’ motion to dismiss the first amended complaint with prejudice. The court denied Moussaoui’s request for jurisdictional discovery, directed the Clerk of Court to terminate the motion, and closed the case.