Court Opinion

ID: 624282
Source: CourtListenerOpinion
Date Created: 2012-03-05 17:13:33+00
Date Added: 2024-06-11T17:51:07.359040
License: Public Domain

10-1306-cv
     Licci v. Lebanese Canadian Bank, SAL

 1                        UNITED STATES COURT OF APPEALS

 2                            FOR THE SECOND CIRCUIT

 3                               August Term, 2010

 4   (Argued:    February 25, 2011                Decided: March 5, 2012)

 5                             Docket No. 10-1306-cv

 6                   -------------------------------------

 7      YAAKOV LICCI, a minor, by his father and natural guardian,
 8    ELIHAV LICCI, and by his mother and natural guardian, YEHUDIT
 9                            LICCI, et al.,

10                            Plaintiffs-Appellants,

11                                      - v -

12       LEBANESE CANADIAN BANK, SAL; AMERICAN EXPRESS BANK LTD.,

13                            Defendants-Appellees.*

14                   -------------------------------------

15   Before:      KEARSE, SACK, and KATZMANN, Circuit Judges.

16               Appeal from a judgment of the United States District

17   Court for the Southern District of New York (George B. Daniels,

18   Judge) granting the motion to dismiss filed by defendants-

19   appellees American Express Bank Ltd. ("AmEx").        The plaintiffs,

20   all Israeli residents, were allegedly injured, or their family

21   members killed or injured, by rockets fired by Hizballah, a

22   Lebanese terrorist organization, into northern Israel in July

           *
            The Clerk of Court is directed to amend the official
     caption as shown above.
 1   and August 2006.     The district court dismissed the plaintiffs'

 2   negligence claim against AmEx, evaluating the claim under New

 3   York state law.     Because we conclude that New York law would

 4   apply even if a conflict between the laws of the relevant

 5   jurisdictions existed, and that the plaintiffs do not have a

 6   viable claim against AmEx under New York law, the judgment of

 7   the district court insofar as it is in favor of AmEx is hereby

 8   AFFIRMED.

 9                 The district court's dismissal of a separate claim

10   against Lebanese Canadian Bank SAL is considered in a separate

11   opinion filed today.

12   Appearances:                 ROBERT J. TOLCHIN, Jaroslawicz &
13                                Jaros, New York, NY, for Plaintiffs-
14                                Appellants.

15                                JONATHAN D. SIEGFRIED (Lawrence S.
16                                Hirsh, on the brief), Dewey & LeBoeuf
17                                LLP, New York, NY, for Defendant-
18                                Appellee Lebanese Canadian Bank, SAL.

19                                MARK P. LADNER (Mark David McPherson,
20                                Michael Gerard, on the brief),
21                                Morrison & Foerster LLP, New York, NY,
22                                for Defendant-Appellee American
23                                Express Bank Ltd.

24   PER CURIAM:

25                 The plaintiffs-appellants, Yaakov Licci et al.,

26   appeal from a March 31, 2010, decision and order of the United

27   States District Court for the Southern District of New York

28   (George B. Daniels, Judge) granting the motions to dismiss

                                         2
 1   filed by defendants-appellees Lebanese Canadian Bank, SAL

 2   ("LCB") and American Express Bank Ltd. ("AmEx").

 3              This opinion addresses only the plaintiffs'

 4   negligence claim against AmEx.   The plaintiffs' claims against

 5   LCB are addressed in an accompanying opinion.   See Licci v.

 6   Lebanese Canadian Bank, SAL, __ F.3d __ (2d Cir. March 5,

 7   2012).   A full account of the underlying facts is set forth in

 8   that opinion.

 9              This case concerns a series of rocket attacks

10   launched by Hizballah, a Lebanese terrorist organization, at

11   targets in northern Israel in July and August 2006.   The

12   plaintiffs are American, Canadian, and Israeli civilians who

13   were injured, or whose family members were injured or killed,

14   during the rocket attacks.   They allege that LCB knowingly

15   maintained bank accounts for an alleged Hizballah affiliate,

16   the Shahid (Martyrs) Foundation ("Shahid"), and carried out

17   dozens of international wire transfers on Shahid's behalf.

18   These wire transfers, which totaled several million dollars,

19   were conducted using LCB's correspondent bank account at AmEx

20   in New York.    The plaintiffs assert that AmEx, by facilitating

21   these wire transfers on behalf of LCB and Shahid, breached a

22   legal duty of care to the plaintiffs and thereby caused the

23   plaintiffs' injuries.

                                       3
 1                "We review the district court's grant of a Rule

 2   12(b)(6) motion to dismiss de novo, accepting all factual

 3   claims in the complaint as true, and drawing all reasonable

 4   inferences in the plaintiff's favor."    Famous Horse Inc. v. 5th

 5   Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010).     In so

 6   doing, we ascertain whether the complaint "contain[s]

 7   sufficient factual matter, accepted as true, to state a claim

 8   to relief that is plausible on its face."    Ashcroft v. Iqbal,

 9   129 S. Ct. 1937, 1949 (2009) (internal quotation marks

10   omitted).    "Because our review is de novo, we are free to

11   affirm the decision below on dispositive but different

12   grounds."    Chase Grp. Alliance LLC v. City of N.Y. Dep't of

13   Fin., 620 F.3d 146, 150 (2d Cir. 2010) (internal quotation

14   marks omitted).

15                This case presents a threshold question of choice of

16   law.   Plaintiffs assert that Israeli law governs their

17   negligence claim, while AmEx maintains that New York law

18   governs.    "We review the district court's choice of law de

19   novo."     Finance One Pub. Co. v. Lehman Bros. Special Fin.,

20   Inc., 414 F.3d 325, 331 (2d Cir. 2005), cert. denied, 548 U.S.

21   904 (2006).

22                "A federal court sitting in diversity or adjudicating

23   state law claims that are pendent to a federal claim must apply

24   the choice of law rules of the forum state."    Rogers v.

                                        4
 1   Grimaldi, 875 F.2d 994, 1002 (2d Cir. 1989).    Accordingly, New

 2   York choice-of-law rules apply in adjudicating the plaintiffs'

 3   negligence claim.

 4             Under New York choice-of-law rules, "'[t]he first

 5   step in any case presenting a potential choice of law issue is

 6   to determine whether there is an actual conflict between the

 7   laws of the jurisdictions involved.'"   Wall v. CSX Transp.,

 8   Inc., 471 F.3d 410, 415 (2d Cir. 2006) (quoting In re Allstate

 9   Ins. Co., 81 N.Y.2d 219, 223, 597 N.Y.S.2d 904, 905, 613 N.E.2d

10   936, 937 (1993)).   A choice-of-law analysis need not be

11   performed unless there is "an 'actual conflict' between the

12   applicable rules of two relevant jurisdictions."   Finance One,

13   414 F.3d at 331.    If no actual conflict exists, and if New York

14   is among the relevant jurisdictions, the court may simply apply

15   New York law.   See Wall, 471 F.3d at 422; Int'l Bus. Machs.

16   Corp. v. Liberty Mut. Ins. Co., 363 F.3d 137, 143 (2d Cir.

17   2004).

18             The district court determined that "no actual

19   conflict exists between the applicable substantive law of

20   negligence in New York and Israel."   Licci v. Am. Express Bank

21   Ltd., 704 F. Supp. 2d 403, 409 (S.D.N.Y. 2010).    It therefore

22   proceeded to evaluate the plaintiffs' negligence claim against

23   AmEx under New York state law.   Id. at 410.   The district court

24   observed that under New York law, "[b]anks do not owe non-

                                       5
 1   customers a duty to protect them from the intentional torts

 2   committed by [the banks'] customers."   Id. (citing Lerner v.

 3   Fleet Bank, N.A., 459 F.3d 273, 286 (2d Cir. 2006)).     The

 4   district court also determined that the plaintiffs had failed

 5   plausibly to allege that AmEx's conduct was the proximate cause

 6   of the plaintiffs' injuries.   Id. at 410-11.   For those

 7   reasons, the district court dismissed the plaintiffs'

 8   negligence claim against AmEx.

 9             On appeal, the plaintiffs contend that there is an

10   actual conflict between Israeli law and New York law, and

11   therefore the district court erred in declining to conduct a

12   choice-of-law analysis.   The plaintiffs further argue that

13   Israeli law, not New York law, governs their negligence claim

14   against AmEx.

15             We use New York conflict of laws principles to

16   determine whether New York or Israeli law governs.   See Rogers,

17   875 F.2d at 1002.   Even if the plaintiffs are correct and an

18   actual conflict exists between the relevant substantive laws of

19   New York and Israel, New York conflicts law directs that

20   "'[t]he law of the jurisdiction having the greatest interest in

21   the litigation will be applied.'"    GlobalNet Financial.Com,

22   Inc. v. Frank Crystal & Co., 449 F.3d 377, 384 (2d Cir. 2006)

23   (quoting Schultz v. Boy Scouts of Am., Inc., 65 N.Y.2d 189,

24   197, 491 N.Y.S.2d 90, 95, 480 N.E.2d 679, 684 (1985)).

                                      6
 1   "Interest analysis is a 'flexible approach intended to give

 2   controlling effect to the law of the jurisdiction which,

 3   because of its relationship or contact with the occurrence or

 4   the parties, has the greatest concern with the specific issue

 5   raised in the litigation.'"    Finance One, 414 F.3d at 337

 6   (quoting Cooney v. Osgood Mach., Inc., 81 N.Y.2d 66, 72, 595

 7   N.Y.S.2d 919, 922, 612 N.E.2d 277, 280 (1993)).

 8                In tort-law disputes, interest analysis distinguishes

 9   between two sets of rules: conduct-regulating rules and loss-

10   allocating rules.    GlobalNet, 449 F.3d at 384.   Conduct-

11   regulating rules are those that "people use as a guide to

12   governing their primary conduct," K.T. v. Dash, 37 A.D.3d 107,

13   112, 827 N.Y.S.2d 112, 117 (1st Dep't 2006), while "[l]oss

14   allocating rules . . . are laws that prohibit, assign, or limit

15   liability after the tort occurs," DeMasi v. Rogers, 34 A.D.3d

16   720, 721, 826 N.Y.S.2d 106, 108 (2d Dep't 2006) (internal

17   quotation marks omitted).

18                The alleged conflict in this case concerns a conduct-

19   regulating rule: the scope of a bank's duty to protect third

20   parties against intentional torts committed by the bank's

21   customers.    "'If conflicting conduct-regulating laws are at

22   issue, the law of the jurisdiction where the tort occurred will

23   generally apply because that jurisdiction has the greatest

24   interest in regulating behavior within its borders.'"

                                        7
 1   GlobalNet, 449 F.3d at 384 (quoting Cooney, 81 N.Y.2d at 72,

 2   595 N.Y.S.2d at 922, 612 N.E.2d at 280).

 3             Applying the interest-analysis test, we conclude that

 4   New York has the greatest interest in this litigation.   All of

 5   the challenged conduct undertaken by AmEx occurred in New York,

 6   where AmEx is headquartered and where AmEx administers its

 7   correspondent banking services.   Although the plaintiffs'

 8   injuries occurred in Israel, and Israel is also the plaintiffs'

 9   domicile, those factors do not govern where, as here, the

10   conflict pertains to a conduct-regulating rule.   Cf. GlobalNet,

11   449 F.3d at 384-85.    We conclude that New York, not Israel, has

12   the stronger interest in regulating the conduct of New York-

13   based banks operating in New York.    See, e.g., Schultz, 65

14   N.Y.2d at 198, 491 N.Y.S.2d at 96, 480 N.E.2d at 684-85 (noting

15   the "locus jurisdiction's interests in protecting the

16   reasonable expectations of the parties who relied on it to

17   govern their primary conduct").

18             Accordingly, even assuming that the district court

19   was mistaken in deciding that there was no actual conflict

20   between New York law and Israeli law, we conclude that a

21   choice-of-law analysis would nonetheless require application of

22   New York law to the plaintiffs' negligence claim against AmEx.

23   The plaintiffs do not dispute that that claim must fail if New

24   York law is applied.   The district court therefore did not err

                                       8
1   in dismissing the plaintiffs' negligence claim against AmEx,

2   and we affirm on that ground.

3             For the foregoing reasons, the judgment of the

4   district court insofar as it is in favor of AmEx is affirmed.

                                    9