Feinberg Aff. at PP 8, 12, Pl.'s Mem. Opp. Ex. D.
I conclude that Plaintiff, in supporting its allegations through factual affidavits, has made a prima facie showing under Pennsylvania's long arm statute. Construing the submissions in the light most favorable to Plaintiff suggests Central Asia directed fraud at the Commonwealth and perpetrated fraudulent acts which injured a party within the Commonwealth. See 42 Pa. Cons. Stat. Ann. § 5322(a)(3), (4). Plaintiff has pointed to evidence that Central Asia submitted to Meridian, on at least three different occasions, documents misrepresenting the intended uses of the advances; Central Asia knew Fashion Will used the monies to pay down Fashion Will's indebtedness; and Central Asia pressured Fashion Will into taking this course of action.
B. MINIMUM CONTACTS
The court must next assess whether application of the Pennsylvania long arm statute to the facts presented violates the Due Process Clause of the United States Constitution. "Pennsylvania's long arm statute provides that its reach is co-extensive with the limits placed on the states by the federal Constitution. We therefore look to federal constitutional doctrine to determine [defendant's] susceptibility to personal jurisdiction in Pennsylvania." Vetrotex Certainteed Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir. 1996) (citation omitted). In order to exercise specific jurisdiction
without offending the Due Process Clause of the Fourteenth Amendment, the Court employs a two prong test. "First, the defendant must have made constitutionally sufficient minimum contacts with the forum . . . . [Second], jurisdiction may be exercised where the court determines, in its discretion, that to do so would comport with traditional notions of fair play and substantial justice." Verotex, 75 F.3d at 150. In evaluating whether minimum contacts exist, the Court must "determine whether the defendant has purposefully directed its activities toward residents of the forum. There must be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Id.
Application of Pennsylvania's long arm statute to the facts presented in the instant case comports with federal notions of due process. Both the perpetration of a tortious act in the forum and the direction of a tortious act at the forum provide the necessary minimum contacts with that jurisdiction to make the exercise of in personam jurisdiction constitutionally permissible. Intentional and allegedly tortious actions expressly aimed at a particular forum indicate a reasonable anticipation of being haled into court in that forum to answer for those actions. Calder v. Jones, 465 U.S. 783, 789-90, 104 S. Ct. 1482, 1487, 79 L. Ed. 2d 804 (1984) (finding the publication of an allegedly libelous story concerning California residents by a Florida newspaper, where the reporter had no relevant contact with California). Calder recognized that "an individual injured in California need not go to Florida to seek redress from persons who, though remaining in Florida, knowingly cause injury in California." Id. Similarly, a Pennsylvania citizen allegedly victimized by the fraud of a Hong Kong bank should not have to travel to Hong Kong for recompense.
The United States Court of Appeals for the Third Circuit employed a similar approach in Gehling v. St. George's School of Medicine, Ltd., 773 F.2d 539 (3d Cir. 1985). There, defendant traveled to Pennsylvania and fraudulently represented the cause of death to plaintiff's decedent, giving rise to a claim for intentional infliction of emotional distress. This activity amounted to minimum contact with the forum. "The cause of action arises from defendant's in-state activities, and the defendant's misrepresentation, which occurred and caused injury in Pennsylvania to Pennsylvania residents, has a sufficient connection to meet the fair place and substantial justice standard of International Shoe." Id. at 544. See Carteret Savings Bank, FA v. Shushan, 954 F.2d 141, 146-147 (3d Cir.) (reasoning "if an allegedly tortious act committed outside the forum state and causing effects within that state can suffice for the exercise of personal jurisdiction . . . clearly an allegedly tortious act committed within the forum state which causes injury to a resident of that state . . . conforms with due process"), cert. denied, 506 U.S. 817, 113 S. Ct. 61, 121 L. Ed. 2d 29 (1992); Paccar Int'l, Inc. v. Commercial Bank of Kuwait, 757 F.2d 1058, 1064 (9th Cir. 1985) (finding "allegedly fraudulent demand for payment [on a letter of credit] . . . is sufficient to establish that [defendant performed some act by which he purposefully availed him/herself of the privilege of conducting activities in the forum]"). Cf. Mann v. Tom James Co., 802 F. Supp. 1293, 1296 (E.D. Pa. 1992) (viewing an unsolicited phone call as insufficient to illustrate that defendant "reasonably anticipated being haled into a Pennsylvania court or that he purposely availed himself of the privilege of conducting business in Pennsylvania").
This jurisprudence rests on the notion that parties who commit a tortious act in a forum, by virtue of this wrongdoing, become available for suit in that forum to answer for their actions. See Gehling, 773 F.2d at 544 ("having traveled to Pennsylvania to return decedent's body, appellees clearly availed themselves of the privilege of acting within Pennsylvania . . . . [They] could reasonably have anticipated being haled into court . . . to answer for their alleged injurious representation").
Central Asia describes its contacts with Pennsylvania as fortuitous and attenuated. I disagree. "Mail and telephone communications sent by defendant into the forum may count toward the minimum contacts that support jurisdiction. It is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines." Grand Entertainment, 988 F.2d at 482 (noting "so long as the contact creates a substantial connection, even a single telephone call into the forum state can support jurisdiction"). Central Asia allegedly enclosed misrepresentations when it contacted the forum via facsimile and hard copy letter. Because a material portion of this litigation revolves around the allegation that Central Asia sent fraudulent facsimiles to Meridian, those contacts create a sufficient connection with the forum to warrant exercising jurisdiction.
Central Asia submitted an affidavit in support of its Motion averring inter alia that it has no physical contacts with this forum, e.g., no branch office, employees, real estate, chattels, telephone listing, registration, license, etc. Central Asia's physical presence in the forum, however, is neither a "jurisdictional litmus test" nor a dispositive factor. Mellon Bank, 960 F.2d at 1225 (noting "when a defendant has received the benefits and protections of the forum's laws by engaging in business activities with a forum resident, the courts have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction") (citation omitted). While Central Asia did not reach out to this forum, it allegedly pressured Fashion Will to induce Plaintiff to modify the letters of credit. Central Asia was well aware that it was dealing with a Pennsylvania bank (Meridian) and a Pennsylvania resident (Plaintiff). Central Asia notified Meridian of the advances by facsimile and letters sent to Meridian's Philadelphia office. Both Letter 1 and Letter 2 listed a Pennsylvania resident (Plaintiff) as "applicant." See Mellon Bank, 960 F.2d at 1223 (stating defendants purposefully availed themselves of the privilege of conducting business in the Pennsylvania where they were aware that they were dealing with a Pennsylvania bank which defendants initially approached to establish a business relationship).
Once the Court finds that Plaintiff has shown sufficient minimum contacts exist to warrant exercising in personam jurisdiction, Defendant may still prevail by presenting a "compelling case that the presence of some other considerations would render jurisdiction unreasonable." Mellon Bank, 960 F.2d at 1226 (citation omitted). Courts describe this burden as "heavy." Grand Entertainment, 988 F.2d at 483. In assessing whether the exercise of personal jurisdiction offends traditional notions of fair play and substantial justice, the Court evaluates the burden on the Central Asia, "the interests of the forum State, and the plaintiff's interest in obtaining relief. It must also weigh in its determination the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several states in furthering fundamental social policies." Asahi Metal Indus. Co., Ltd. v. Superior Court, 480 U.S. 102, 113, 107 S. Ct. 1026, 1033, 94 L. Ed. 2d 92 (1987) (internal quotations and citations omitted).
The relevant interests in the instant case tip the scales in Plaintiff's favor and compel the conclusion that Central Asia has not satisfied its burden. Pennsylvania has a strong interest in this litigation. The suit surrounds letters of credit issued by a Pennsylvania bank (Meridian) on the request of a Pennsylvania applicant (Plaintiff) which claims that it has been defrauded. Central Asia has made demands in Pennsylvania against Meridian for payment under the letters of credit. If Meridian remits the funds to Central Asia, Meridian will then look to a Pennsylvania resident, Plaintiff, for reimbursement. In evaluating the "interests of the several states," this Court need not concern itself with favoring one state over the another because only one state, Pennsylvania, has an interest in this litigation.
Central Asia argues that it would be fundamentally unfair and unreasonable to require it to litigate this claim in Pennsylvania considering that all witnesses and evidence are located thirteen (13) time zones away in Hong Kong. In Asahi, the Supreme Court, in finding the exercise of in personam jurisdiction unreasonable, accorded significant weight to the fact that defendant would have to travel from Japan to California to defend itself. "[Defendant] has been commanded . . . not only to traverse the distance between [Japan and California] . . . but also to submit its dispute . . . to a foreign nation's legal system." Id. at 114, 107 S. Ct. at 1033. While Asahi appears to support Central Asia's position, the facts presented in that case are readily distinguishable. Asahi examined reasonableness in the context of whether a California court could exercise jurisdiction over a dispute between a Japanese tire valve assembly manufacturer and a Taiwanese tire manufacturer. While both parties to the Asahi litigation were foreign corporations, the instant case involves a lawsuit between a Pennsylvania corporation and a Hong Kong corporation. With one party anchored in the forum, any hardship suffered by Central Asia does not rise to the level of unreasonableness found in Asahi.
Finally, Central Asia contends that any exercise of in personam jurisdiction will have a chilling effect on the international finance community. According to Central Asia, banks will refuse to process letters of credit if mere allegations of fraud will subject them to jurisdiction in a foreign forum. After weighing this argument in the balancing test, I conclude that the chilling effect fails to compel a conclusion of unfairness. Several courts "have held that the mere issuance of a letter of credit naming a resident of a particular state as beneficiary does not subject the issuing bank to the jurisdiction of that state." Chandler v. Barclays Bank, PLC, 898 F.2d 1148, 1151 (6th Cir. 1990).
Courts understand that "it would be unfair to burden an issuing bank with having to defend litigation over a letter of credit in any state in which the bank could reasonably expect the credit to be used." Jet Charter, 907 F.2d at 1114 (citation omitted). See Leney, 670 F.2d at 881 (refusing to subject "any bank that issues a letter of credit to suit in any state in which the bank could expect the credit to be used to buy goods or real estate").
The rationale behind these decisions is that it would be fundamentally unfair to subject an issuing bank to a forum's jurisdiction solely because the beneficiary sued under a letter of credit in that forum. A contrary result would produce an unreasonable chilling effect and present serious impediments to financial transactions. The instant case presents a situation dealing with more than a beneficiary suing an issuing bank exclusively on the basis of a financial transaction; the Court faces verified allegations of fraud. While it may be unfair to burden an issuing bank with the prospect of defending litigation in any forum where the letter of credit was used to buy goods or property, it is not unduly burdensome to subject a negotiating bank to personal jurisdiction in a forum where it allegedly committed tortious acts. The burden imposed on Central Asia does not rise to the same level of unreasonableness as that suffered by banks which did no more than issue a letter of credit. Accordingly, I find that exercising in personam jurisdiction over Central Asia will not offend traditional notions of fair play and substantial justice.
An appropriate Order follows.
AND NOW, this 28th day of March, 1996, upon consideration of Defendant Central Asia Capital Corporation, Limited's Motion to Dismiss (Doc. No. 3); Plaintiff's Memorandum in Opposition thereto (Doc. No. 5); Defendant's Reply Brief in Support of Its Motion (Doc. No. 6); and oral argument held before this Court on February 23, 1996, IT IS HEREBY ORDERED THAT:
1. Defendant's Motion is DENIED.
BY THE COURT:
John R. Padova, J.