Court Opinion

ID: 52402
Source: CourtListenerOpinion
Date Created: 2010-04-26 01:15:31+00
Date Added: 2024-06-11T09:40:12.188970
License: Public Domain

United States Court of Appeals
                                                                  Fifth Circuit
                                                               F I L E D
                    UNITED STATES COURT OF APPEALS
                                                               September 7, 2007
                         FOR THE FIFTH CIRCUIT
                                                           Charles R. Fulbruge III
                                                                   Clerk

                             No. 06-10948

     ABLE FUND, ABLE EURO FUND, BANK OF BERMUDA GUERNSEY, BANQUE
     CANTONALE VAUDOISE, BANQUE DE LUXEMBOURG, BANKQUE PRIVEE
     EDMOND DE ROTHSCHILD LIMITED, BLAZER CAPITAL, INC., CREDIT
     SUISSE PRIVATE BANKING, HERACLES, THE HERROSEN GLOBAL FUND
     LTD, PICTET & CIE BANQUIERS, KB LUX SPECIAL OPPORTUNITIES
     INVESTING, KGH NEPTUNE, KGH SATURNE, MARTINEX LTD, SOCIETE
     EUROPEENE DE BANQUE, SOMERS DUBLIN LIMITED, FRIEDRICH
     ZELLWEGER,

                                          Plaintiffs-Appellants,

                                    v.

     KPMG ACCOUNTANTS NV, CITCO FUND SERVICES (CURACAO) NV,

                                          Defendants-Appellees.

         Appeal from the United States District Court for the
              Northern District of Texas, Dallas Division
                              3:05-CV-2263

Before SMITH, BENAVIDES, and DENNIS, Circuit Judges.

PER CURIAM:*

     This is an appeal from the district court’s dismissal of

Plaintiffs’    claims   against   out-of-state   Defendants.     Because

personal jurisdiction is lacking as to both defendants, we affirm.

     *
       Pursuant to 5th Cir. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5th Cir. R. 47.5.4.
I.    FACTUAL BACKGROUND AND PROCEDURAL HISTORY

      Plaintiffs, eighteen European and Caribbean investment groups,

invested in an offshore hedge fund, Dobbins Offshore, Ltd. (“the

Fund”), that advertised immunity from American regulation and

taxation. Plaintiffs sued the Fund; J. Robert Dobbins, director of

the   Fund;   Dobbins   Offshore   Capital,     LLC   (“Dobbins   Capital”),

manager of the Fund; Citco; and KPMG, claiming that the Defendants

made a series of misrepresentations to induce Plaintiffs to invest

in the Fund, asserting causes of action for fraud, breach of

fiduciary duty, and negligence.           The Fund is a British Virgin

Islands corporation with its principal place of business on the

island of Tortola, and both Dobbins and Dobbins Capital are Texas

residents.

      Defendant Citco Fund Services (Curacao), N.V. (“Citco”), a

foreign corporation with its sole place of business in Curacao,

Netherlands Antilles,       provided administrative services to the

Fund.   Plaintiffs allege that Citco committed fraud and negligence

by failing to verify independently that the Fund’s portfolio was

accurately valued and by disseminating false monthly New Asset

Valuation (“NAV”) statements to investors.            The relevant contacts

between   Citco   and   Texas   are   limited    to    mailed   and   emailed

communications and phone calls to Dobbins and Dobbins Capital in

Texas, and correspondence with the Fund’s Texas counsel and a Texas

brokerage firm.

        KPMG Accountants, N.V. (“KPMG”), also a Netherlands Antilles

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firm, provided accounting services to the Fund.              Plaintiffs allege

that KPMG committed fraud and negligence by wrongfully issuing a

“clean” audit report to investors.            KPMG does not maintain a Texas

office or maintain a registered agent or bank account in Texas.

The relevant contacts between KPMG and Texas are limited to email,

phone, and in-person communications regarding the KPMG audit of the

Fund and payment to KPMG for its work and the mailing of the audit

reports to Dobbins and Dobbins Capital in Texas.

      Plaintiffs     filed    this    suit    in    Texas   state   court,    and

Defendants removed to federal court.            Citco and KPMG successfully

moved to dismiss the case against them for lack of personal

jurisdiction, and Plaintiffs appealed.

II.   DISCUSSION

      We review a district court’s dismissal for lack of personal

jurisdiction de novo.        Central Freight Lines Inc. v. APA Transport

Corp., 322 F.3d 376, 380 (5th Cir. 2003).

      In order for personal jurisdiction to satisfy Due Process

requirements,    a   plaintiff       must    show   that    (1)   the   defendant

“purposefully availed himself of the benefits and protections of

the forum state by establishing ‘minimum contacts’ with the forum

state; and (2) the exercise of jurisdiction over that defendant

does not offend ‘traditional notions of fair play and substantial

justice.’”      Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir.

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1999).1 We find that the defendants did not establish minimum

contacts.

       We consider Citco and KPMG in turn.2

       Citco’s communications into Texas were primarily directed to

co-defendant Dobbins, did not provide the basis for the alleged

tort, and were not directed to the plaintiffs.                         This stands in

contrast to the cases cited by the plaintiffs in which foreign

defendants contracted with a Texas resident and sent communications

to shareholders in Texas.             See, e.g. Gutierrez v. Cayman Islands

Firm of Deloitte & Touche, 100 S.W.3d 261 (Tex. App. San Antonio

2002).          As the district court correctly found, this is neither a

case       in    which   an    intentional        tort    arises     from   an   alleged

misrepresentation directed to a Texas resident, nor is this a case

in which the injury from an alleged tort, perpetrated elsewhere,

was suffered here. Cf. Wien Air Alaska, Inc. v. Brandt, 195 F.3d

208,       212–13    (5th     Cir.   1999)       (“When    the     actual   content   of

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      The Texas long-arm statute extends personal jurisdiction to
the permissible limits of the Due Process Clause, and so we only
need to determine whether the exercise of personal jurisdiction in
this case would comport with those federal guarantees. Latshaw,
167 F.3d at 211; Bullion v. Gillespie, 895 F.2d 213, 216 (5th Cir.
1990).
       2
      Personal jurisdiction can be of either the general or
specific variety, Mink v. AAAA Develop., LLC, 190 F.3d 333, 336
(5th Cir. 1999), but it is not disputed that Citco and KPMG lack
sufficient contacts to justify general jurisdiction.      Specific
jurisdiction can be exercised “in a suit arising out of or related
to the defendant’s contacts with the forum.”          Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8(1984).

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communications with a forum gives rise to intentional tort causes

of action, this alone constitutes purposeful availment.”).

       No Plaintiff is a resident of or was injured in Texas.                    The

torts alleged against Citco are wholly unrelated to the forum, and

no tort is alleged to have been committed in whole or part in this

state.    See Jobe v. ATR Marketing, Inc., 87 F.3d 751, 753–54 (5th

Cir. 1996) (finding no personal jurisdiction where injury occurred

outside forum).        While a court can base specific jurisdiction not

only on conduct from which the cause of action arises, but also on

conduct “related to” the claims, see Helicopteros, 466 U.S. at 414

n.8,     the    Citco-Dobbins       communications      do   not     support     the

requirement that Citco purposefully avail itself of the benefits

and protections of the forum.           See Holt Oil & Gas Corp. v. Harvey,

801 F.2d 773, 778 (5th Cir. 1986) (finding that exchange of

communications in course of developing and carrying out contract

does not, by itself, constitute required purposeful availment of

benefits protections           of   Texas   law).    Rather,   the    sole     Texas

connection rests on the fortuitous location of a co-defendant with

which Citco was obliged to correspond in the performance of its

offshore duties. See Burger King Corp. v. Rudzewicz, 471 U.S. 462,

476 (1985)(finding that random, fortuitous, or attenuated contacts

are not sufficient to establish jurisdiction); Freudensprung v.

Offshore Tech. Serv., Inc., 379 F.3d 327, 334–44 (5th Cir. 2004)

(finding       no   personal   jurisdiction     based   on   interaction       among

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related co-defendants). Having considered all relevant factors and

potential contacts, we find that the district court was correct in

finding that Citco lacks minimum contacts with Texas.

     The claims against KMPG are based on the audit it performed

for the Fund.   KPMG performed the audit in the Netherlands Antilles

and mailed the audit from that location to Citco in Curacao.   Citco

then distributed it to the Plaintiffs in Europe and the Caribbean.

KPMG’s sole Texas contacts were made to collect information for use

in the audit.   As explained above, mere communications with a co-

defendant whom a defendant is obliged to communicate with in the

carrying out of its duties are not sufficient to establish minimum

contacts.    See Holt Oil, 801 F.2d at 778.   The plaintiffs do not

allege any conduct on the part of KPMG that supports the district

court’s exercise of personal jurisdiction.

     Given our finding that no minimum contacts exist to exercise

jurisdiction over Citco and KPMG, we do not need to consider

whether such jurisdiction would violate traditional notions of fair

play and substantial justice.

III. CONCLUSION

     For the foregoing reasons, we AFFIRM the district court’s

dismissal.

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