Elghossain v. Bank Audi S.A.L.

Background

George S. Elghossain and Mona C. Elghossain, a married couple who represented themselves, sued Bank Audi S.A.L., Banque du Liban, and John and Jane Does 1–10. They asserted claims for civil conspiracy, fraud, breach of contract, conversion, unjust enrichment, promissory estoppel, and violations of the Racketeer Influenced and Corrupt Organizations Act.

The plaintiffs alleged that Bank Audi encouraged them to place U.S. dollars into a Lebanese-pound account known as “Product 705,” which promised a 15% interest rate. They alleged that Bank Audi’s representative told them they could close the account and transfer their money out of Lebanon, but that Bank Audi later refused to transfer their funds. They also alleged that Banque du Liban and Lebanese commercial banks had imposed unofficial restrictions that left their dollar deposits trapped in Lebanon. The plaintiffs alleged losses of about $650,000 and sought more than $3 million in compensatory and exemplary damages, plus treble damages under the federal racketeering statute.

Motions and Report

Bank Audi moved to dismiss under Federal Rule of Civil Procedure 12(b)(2), which concerns personal jurisdiction over a defendant, and Rule 12(b)(6), which concerns whether a complaint states a legally sufficient claim. Bank Audi also argued that the case should be heard in Lebanon rather than New York under the doctrine allowing dismissal when another forum is more appropriate. Banque du Liban moved under Rules 12(b)(1), 12(b)(2), and 12(b)(6), and made the same alternative forum argument.

Magistrate Judge Moses recommended granting both motions. She recommended dismissing the claims against Banque du Liban for lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act. That statute generally protects foreign states and their agencies from suit in U.S. courts unless an exception applies. Judge Moses concluded that the commercial-activity exception did not apply because the amended complaint did not allege a communication or transaction between the plaintiffs and Banque du Liban, or a qualifying direct effect in the United States.

Judge Moses also recommended dismissing the claims against Bank Audi without prejudice for lack of personal jurisdiction. She concluded that the plaintiffs adequately alleged that Bank Audi used correspondent bank accounts in New York, but did not show that their claims arose from that New York activity. The recommendation explained that the claims concerned measures allegedly taken in Lebanon to keep dollar deposits there, making the connection to the New York accounts only coincidental. The recommendation also stated, in the alternative, that all claims should be dismissed without prejudice under the doctrine allowing a case to proceed in a more appropriate foreign forum.

Plaintiffs’ Objections

The plaintiffs objected that Judge Moses had disregarded portions of their filings, that the foreign-sovereign-immunity exception applied to Banque du Liban, that Bank Audi was subject to New York’s long-arm jurisdiction, and that Lebanon was not an adequate alternative forum. They also argued that Bank Audi had altered or forged the 2018 account agreement.

Judge Gardephe rejected the objections. He held that the plaintiffs’ arguments about the commercial-activity exception were speculative and conclusory, and that the amended complaint did not allege facts showing that Banque du Liban’s conduct fell within that exception. He also agreed that the plaintiffs had not shown the required connection between Bank Audi’s New York correspondent accounts and their claims.

The court further held that Judge Moses properly disregarded legal arguments placed in the plaintiffs’ declarations because the plaintiffs had been directed to present their arguments in a single opposition brief. The court concluded that the plaintiffs had repeated those arguments in their brief in any event. It also agreed that Lebanon provided an adequate alternative forum and that Lebanon had a stronger interest in the dispute than New York.

Disposition

The court adopted Judge Moses’s Report and Recommendation in its entirety. It granted Defendants’ motions to dismiss and directed the clerk to terminate the motions and close the case. The court did not reach the merits of the plaintiffs’ claims. The opinion’s conclusion states that the motions were granted; the more specific recommendations described dismissals without prejudice for certain jurisdictional grounds and, alternatively, for the foreign-forum ground.