Monkton Ins. Servs., Ltd. v. Ritter v. Butterfield Bank (Cayman), Ltd., No. 13-50941 (5th Cir. Sept. 26, 2014) [click for opinion]

William Ritter is a Texas resident who owns Geneva Insurance (“Geneva”), a Cayman corporation. Monkton Insurance Services (“Monkton”) is an insurance manager, also incorporated in the Cayman Islands, that managed Geneva. David Self was director and manager of Monkton. On behalf of Geneva, Self opened an account with Cayman bank Butterfield, using documents that were faxed to Ritter in Texas for his signature. The bank documents identify both Self and Ritter as directors of Geneva. The contracts provide that performance, jurisdiction, and governing law will be that of the Cayman Islands.

Self allegedly withdrew nearly half a million dollars from Geneva’s account with Butterfield without Ritter’s consent. After Ritter demanded that Self repay him, Monkton discovered that Self transferred money to Ritter from Monkton’s client accounts. Monkton then sued Ritter in Texas for the return of the money. Ritter sought to implead Butterfield as a third-party defendant, alleging the bank breached its contracts with Geneva by failing to detect Self’s forged signatures on account withdrawals, and requested a continuance to conduct jurisdictional discovery. The court denied Ritter’s request and granted Butterfield’s motion to dismiss for lack of personal jurisdiction.

The Fifth Circuit affirmed, rejecting Ritter’s arguments that the federal court in Texas had either general or specific jurisdiction over Butterfield. As to general jurisdiction, the court noted that the place of incorporation and principal place of business are where a corporation is considered “at home,” and thus it is difficult to establish general jurisdiction in another forum. Accordingly, Butterfield—a Cayman bank incorporated in the Cayman Islands with its principal place of business in Grand Cayman—was “at home” in the Cayman Islands. The court found that Butterfield’s contacts with Texas through its website, telephone conversations with Ritter, and wire transfers to Texas banks were not sufficiently continuous and systematic to justify the exercise of general jurisdiction. Butterfield’s website showed only that Butterfield conducts business with Texas, not in Texas, and the communications and wire transfers were initiated by Ritter and Geneva, not Butterfield.

Ritter also argued Butterfield was subject to specific jurisdiction in Texas because (1) it entered into an account contract with Geneva, through its owner and director, Ritter, a resident of Texas; (2) Self sent the bank contract to Ritter in Texas; (3) twenty wire transfers were made between Geneva’s account with Butterfield in the Cayman Islands and bank accounts in Texas; and (4) Butterfield communicated with Ritter by phone on eight occasions. The Fifth Circuit rejected these contacts as insufficient to support specific jurisdiction. The court explained that a defendant does not have minimum contacts with a state when it has no physical presence there, it does not conduct business there, and the contract underlying the lawsuit was not signed in the state and does not call for performance there. In addition, a plaintiff’s own contacts with the forum cannot be used to demonstrate contacts by the defendant.

Ritter also challenged on appeal the district court’s denial of his motion for jurisdictional discovery. The district court’s order was affirmed because a plaintiff is not entitled to jurisdictional discovery where the record shows the requested discovery is unlikely to produce the facts needed to withstand a Rule 12(b)(1) motion. The additional discovery Ritter sought would only allow him to access more information regarding Butterfield’s other contacts with Texas—facts that would not be enough to show that Butterfield was “at home” in Texas. Accordingly, the Fifth Circuit affirmed the district court’s order in all respects.

Eugenie Robichaux of the Dallas office contributed to this summary.