Able Fund v. KPMG Accountants NV , 247 F. App'x 504 ( 2007 )

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this opinion should not be published and is not precedent except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.
3
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
1
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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