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Midamines Sprl Ltd. v. KBC Bank N.V.

United States District Court, N.D. Illinois, Eastern Division

January 16, 2018

KBC BANK N.V., Defendant.


          John J. Tharp, Jr., United States District Judge

         This dispute, over a sum of about $100, 000, has traveled a long and winding road. What began in Belgium has made stops in the Democratic Republic of Congo, New York federal and state courts, the Second Circuit, and now the Northern District of Illinois. Before the Court is a motion by Defendant KBC Bank N.V. (“KBC”) to dismiss this action on numerous grounds, including lack of subject matter and personal jurisdiction, collateral estoppel, forum non conveniens, and failure to state a claim. In short, KBC argues that the plaintiff, Midamines SPRL Ltd. (“Midamines” or “Midamines Illinois”) (in reality, its sole officer, Hassan Abbas, who also serves as Midamines' counsel), should not be permitted to open up yet another front in this protracted conflict. The Court could not agree more. Among the host of reasons KBC offers for why this case does not belong here, the Court needs only one: lack of personal jurisdiction. Because Midamines has failed to show that KBC has any significant ties to Illinois or that its suit-related conduct is connected to this state in a meaningful way, the complaint is dismissed without prejudice under Rule 12(b)(2). Furthermore, the complaint appears to be frivolous for reasons other than lack of personal jurisdiction, and even though this Court does not have jurisdiction over KBC and cannot resolve the case on the merits, it does have the authority to assess sanctions for the filing of a frivolous complaint. The Court therefore will require Midamines and Abbas to show cause why Rule 11 sanctions should not be imposed for filing a frivolous pleading.


         A. Facts[1]

         KBC is a Belgian bank and insurance company organized under Belgium law with its principal offices in Brussels. (Grimmig Decl. ¶ 2, ECF No. 17-5.) KBC operates worldwide through its branches and sister banks in Europe, and has one branch office in the United States, which is located in New York. (Id. ¶¶ 3-4.) In 2006, Midamines SPRL (“Midamines Congo”), a diamond mining company registered in the Democratic Republic of Congo, opened a bank account with one of KBC's independently operated subsidiaries (the “Antwerp Bank”).[2](Vanhuysse Decl. ¶¶ 2, 5-6, ECF No. 38-1.) In 2012, the Antwerp Bank closed Midamines Congo's account due to a dispute within the company over who had control over the account. (Id. ¶ 11, 13-14.) After closing the account, the Antwerp Bank issued two bank checks that represented the balances of two subaccounts-a dollar denominated check in the amount of $35, 110.72 (the “USD Check”) and a Euro denominated check in the amount of €56, 414.73 (the “Euro Check”) (together “the Bank Checks”). (Id. ¶ 20.) Both checks were made payable to Midamines Congo. (Id.; see also Abbas Decl., Ex. E, ECF No. 44-5.)

         On August 8, 2012, the Antwerp Bank delivered the Bank Checks to Abbas in his capacity as a proxy holder for the Midamines Congo account. (Compl. ¶¶ 8-9, ECF No. 1; Vanhuysse Decl. ¶¶ 15-20.) According to Abbas, the checks served as payment for professional legal services he rendered to Midamines Congo from 2009 to 2012. (Compl. ¶ 9.) Shortly after the checks were issued, the Midamines Congo account became the subject of two lawsuits: one in the Democratic Republic of Congo and another in Belgium. (Vanhuysse Decl. ¶¶ 22-30.) The Congolese litigation concerned the validity of the documentation Abbas (and others) used to obtain a proxy on the account and resulted in an order rendering that documentation invalid. (Id. ¶¶ 36-37.) In the Belgian litigation, an Antwerp commercial court issued an injunction prohibiting the Antwerp Bank from executing any payment instructions relating to the account. (Id. ¶¶ 22-24.) In accordance with the injunction, on August 24, 2012, the Antwerp Bank stopped payment on the Bank Checks. (Id. ¶ 24.) The bank also informed Abbas that it could not honor the checks due to the injunction. (Id. ¶ 25.)

         About a month later, on September 26, 2012, Abbas incorporated Midamines Illinois. (Abbas Decl., Ex. B, ECF No. 44-2.) Shortly thereafter, on October 11, 2012, the USD Check was deposited at a PNC bank in New York. (Compl. ¶ 10.) The check had been endorsed payable to a Midamines Illinois account, which had been opened in Illinois. (Abbas Decl. ¶ 9.) Later that day, KBC New York posted the USD Check for payment and credited Midamines Illinois' account for $35, 110.72, the value of the USD Check. (Compl. ¶ 10; Grimmig Decl. ¶ 10.) KBC then debited Antwerp Bank's account for the same amount. (Grimmig Decl. ¶ 10.)

         On October 19, 2012, the Antwerp Bank sent KBC an inquiry regarding the $35, 110.72 debit and reminded the New York branch that it had issued a stop payment order on the USD Check. (Id. ¶ 11.) Later that day, KBC New York notified its electronic payment vendor that the check was subject to a stop order, which had the effect of stopping payment on the check. (Id. ¶ 12.) KBC New York then reversed the credit on October 23, 2013 and re-deposited the $35, 110.72 into the Antwerp Bank's account. (Id. ¶ 13.)

         The following month, the Euro Check was deposited at a Citibank in New York for payment to a second Midamines Illinois account. (Abbas Decl. ¶ 13, see also Ex. E.) On November 14, 2012, the U.S. Bank National Association presented the Euro Check to KBC in Brussels for payment. (Berkers Decl. ¶ 4, ECF No. 38-5.) KBC, however, refused to honor the check based on the stop payment order that had been issued by the Antwerp Bank. (Id. ¶ 6.)

         B. Procedural History

         Shortly after KBC refused to honor the Euro Check, Abbas, on behalf of himself, Midamines Illinois, and Midamines Congo, filed suit against KBC and the Antwerp Bank in the Southern District of New York (the “New York Federal Action”). That suit alleged that KBC and the Antwerp Bank wrongfully dishonored the Bank Checks and sought damages for fraud, conspiracy to commit fraud, money laundering, RICO, and unjust enrichment. See Midamines SPRL Ltd. v. KBC Bank NV, No. 12 C 8089 (RJS), 2014 WL 1116875, at *1 (S.D.N.Y. Mar. 18, 2014). KBC and the Antwerp Bank moved to dismiss the complaint on several grounds, including forum non conveniens. Id. at *2. The defendants argued that any disputes arising out of the Midamines Congo account are subject to a forum selection clause that requires litigation in Belgium. Id. In March 2014, the New York district court agreed and dismissed the suit. Id. at *7. In so holding, the court found that the forum selection clause was mandatory, extended to Abbas and Midamines Illinois, and applied to any claim “arising out of [KBC and the Antwerp Bank's] refusal to honor the Bank Checks. Id. at *3-6.

         Abbas and Midamines Illinois appealed the district court's decision. In early 2015, the Second Circuit upheld the district court's ruling in a summary order. Midamines SPRL Ltd. v. KBC Bank NV, 601 F. App'x 43 (2d Cir. 2015). The court found no error in the district court's opinion and agreed that the suit was properly dismissed as to all parties on the basis of forum non conveniens. Id. at 44-45.

         Immediately following the Second Circuit's decision, Abbas and Midamines Illinois filed suit in New York state court seeking damages relating to both Bank Checks (the “New York State Action”). In February 2016, the New York state court dismissed the action, in part, because all of the claims were, or could have been, raised by the plaintiffs in the New York Federal Action and that the claims were governed by a forum selection clause that required the litigation to be brought in Belgium. Transcript, Midamines SPRL Ltd. v. KBC Bank N.V., Index No. 100383/2015 (N.Y. Sup. Ct. Feb. 5, 2016). In other words, the court concluded that the plaintiffs were barred by collateral estoppel from re-litigating Abbas and Midamines Illinois' claims concerning the Bank Checks in New York.

         In March 2016, Abbas again filed suit in New York federal court, this time against KBC's counsel, asserting a claim for tortious interference with business relations (the “Abbas Litigation.”) The New York district court dismissed the suit soon thereafter. Opinion and Order, Hassan A. Abbas, Esq. v. Orrick, Herrington, & Sutcliffe LLP, No. 15 C 1545 (RJS) (S.D.N.Y Mar. 16, 2016). In granting KBC's motion to dismiss, the court found that “the Complaint does not come close to satisfying the standard for a tortious interference claim[;] . . . [r]ather, it seems designed, like many of [Abbas'] previous motions in the [New York Federal Action], to prolong litigation and continue to harass” KBC's counsel. Id. at 13. In June 2016, following written submissions and a hearing, the court issued an order enjoining Abbas from “making any filings in this Court in this case or in any action involving the allegations set forth in the related [New York Federal] Action without first obtaining leave of the Court.” Order at 7, Hassan A. Abbas, Esq. v. Orrick, Herrington, & Sutcliffe LLP, No. 15 C 1545 (RJS) (S.D.N.Y Mar. 16, 2016).

         Following the issuance of this injunction, Abbas sought leave in the New York Federal Action to file a declaratory suit against KBC. The district court denied the request, stating that the “contemplated declaratory judgment action is clearly an attempt to relitigate the same issues raised in the Complaint in this action” and “Abbas makes no attempt to explain why this action would not also be dismissed under the forum non conveniens doctrine.” Order at 1-2, Midamines SPRL Ltd. v. KBC Bank NV, No. 12 C 8089 (RJS) (S.D.N.Y. June 27, 2016). After the district court denied Abbas' motion for reconsideration, he filed a second request for leave to file an amended complaint, this time on behalf of Midamines Illinois and Midamines Congo. The court denied this request as well, stating that Abbas “cannot so cavalierly circumvent the Court's filing injunction” by bring the same suit “in the names of other entities that evidently serve as alter egos for Abbas himself.” Order at 2, Midamines SPRL Ltd. v. KBC Bank NV, No. 12 C 8089 (RJS) (S.D.N.Y. Sept. 12, 2016).

         Abbas subsequently appealed the district court's filing injunction; however, the Second Circuit recently upheld the ruling in another summary order. Summary Order, Midamines SPRL Ltd. v. KBC Bank N.V., No. 16-1048-CV (2d Cir. Dec. 6, 2017). The appellate court noted in its decision that Abbas' declaratory action claim, which “seeks a judgment that he is entitled to bank funds allegedly held by KBC, ” was both an evasion of the district court's ...

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