Kreit v. Byblos Bank S.A.L.

Background

Nader Kreit, whom the opinion identifies as a dual citizen of the United States and Syria, alleged that he maintained wealth-management accounts with Byblos Bank S.A.L., a banking entity with its principal place of business in Lebanon. Between 2012 and 2017, he transferred substantial sums from his Wells Fargo account to Byblos Bank in Lebanon, including $4,825,000 between November 13, 2015, and July 5, 2018.

Kreit alleged that, after a financial crisis in Lebanon began in 2019, Byblos Bank refused several requests to transfer his funds to his U.S. bank account. He specifically alleged that the bank refused a request to transfer €2,115,000. In 2022, the bank notified him that it was closing his accounts and offered to send a check for his remaining balance in Lebanese currency. Kreit alleged that his deposits had been converted from U.S. dollars into Lebanese pounds without his consent and had lost value because of hyperinflation.

Claims and jurisdictional arguments

Kreit asserted five claims: breach of contract, conversion, violations of New York’s Uniform Voidable Transactions Act and Uniform Fraudulent Conveyance Act, and fraudulent conveyance under New York Debtor and Creditor Law. Byblos Bank moved under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). Rule 12(b)(2) permits dismissal for lack of personal jurisdiction, meaning the court lacks power over the defendant. Rule 12(b)(6) permits dismissal for failure to state a legally sufficient claim.

Kreit relied primarily on New York’s specific personal-jurisdiction statute, New York Civil Practice Law and Rules § 302(a)(1). That statute requires both that the defendant transact business in New York and that the plaintiff’s claim arise from that New York business activity. Kreit alleged that Byblos Bank maintained correspondent bank accounts with banks in New York and used them to facilitate transfers involving U.S. dollars.

The court had previously denied Kreit’s request for an attachment of funds in Byblos Bank’s New York correspondent accounts, finding that Kreit had not established the required connection between those accounts and his claims. The court treated that earlier jurisdictional ruling as controlling in the current case.

Court’s analysis

The court relied principally on the Second Circuit’s decision in Daou v. BLC Bank, S.A.L., which involved similar allegations that Lebanese banks refused to transfer U.S. dollar deposits from Lebanon to the United States. Under Daou, the use of New York correspondent accounts may satisfy the requirement that a bank transacted business in New York. But the plaintiff must also show that the claims arose from a specific transaction or business activity in New York.

The court concluded that Kreit had not made that showing. His allegations concerned Byblos Bank’s refusal to transfer money, conversion of money from U.S. dollars into Lebanese pounds, and transfers to other parties. The court found that these alleged actions occurred in Lebanon. The fact that money Kreit sent to Lebanon may have passed through a New York correspondent account, or that a requested transfer might have used such an account if it had occurred, did not provide the required connection. The court described that connection as merely coincidental and found no actual, specific New York transaction underlying Kreit’s claims.

The court also denied Kreit’s request for jurisdictional discovery. It found that he had not made an initial showing that the court could properly exercise jurisdiction and had not shown that the requested information would address the key jurisdictional issue.

Disposition

Judge Lewis J. Liman granted Byblos Bank’s motion to dismiss for lack of jurisdiction. The court did not reach the bank’s remaining arguments, including its arguments that the complaint failed to state a claim, its forum-selection-clause argument, and its argument based on the doctrine allowing dismissal when another forum is more appropriate. The court dismissed Kreit’s complaint without prejudice and directed the Clerk of Court to close the case.