09-0478-cv
Guirlando v. T.C. Ziraat Bankasi A.S.
09-0478
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3
4 August Term, 2009
5 (Argued: October 23, 2009 Decided: April 8, 2010)
6 Docket No. 09-0478-cv
7
8 THERESA GUIRLANDO*,
9 Plaintiff-Appellant,
10 - v. -
11 T.C. ZIRAAT BANKASI A.S.,
12 Defendant-Appellee.
13
14 Before: JACOBS, Chief Judge, KEARSE, Circuit Judge, and GARDEPHE,
15 Dlstrlct Ju d ge ** .
. .
16 Appeal from final judgment and order of the United States
17 District Court for the Southern District of New York, Richard J.
18 * Although in the notice of appeal, as well as in the briefs
19 filed in this Court, plaintiff's name is spelled "Giurlando,"
20 which matches the spelling on reproductions of her driver's
21 license and passport in the record, her name is spelled
22 "Guirlando" in her original complaint and in the orders
23 issued by the district court. "Because legal research
24 catalogs and computers are governed by the principle of
25 consistency, not correctness, we feel constrained to adhere
26 to the erroneous spelling." Ford Motor Credit Co. v.
27 Milhollin, 444 U.S. 555, 555 n.* (1980).
28 * * Honorable Paul G. Gardephe, of the Uni ted States District
29 Court for the Southern District of New York, sitting by
30 designation.
1 Sullivan, Judge, dismissing, for lack of subject matter
2 jurisdiction under the Foreign Sovereign Immuni ties Act, see 28
3 U.S.C. §§ 1330 (a) , 1605 (a) (2), plaintiff's claims against
4 defendant Turkish bank for conduct in Turkey enabling the theft of
5 moneys from her Turkish bank account.
6 Affirmed.
7 V. ELI ZABETH GRAYSON, New York, New York,
8 for Plaintiff-Appellant.
9 MICHAEL T. SULLIVAN, New York, New York
10 (Sullivan & Worcester, New York, New
11 York, on the brief), for Defendant-
12 Appellee.
13 KEARSE, Circuit Judge:
14 Plaintiff Theresa Guirlando ("Guirlando") appeals from a
15 final judgment of the United States District Court for the
16 Southern District of New York, Richard J. Sullivan, Judge,
17 dismissing her claims against defendant T.C. Ziraat Bankasi A.S.,
18 a Turkish bank ("Ziraat" or the "Bank"), for, inter alia,
19 neg'ligence, negligent and intentional misrepresentations and
20 omissions, and breach of fiduciary duty in enabling Guirlando' s
21 husband to withdraw most of her life savings from a newly
22 established bank account in Turkey. The district court granted
23 Ziraat's motion pursuant to Fed. R. Civ. P. 12(b) (1) and
24 provisions of the Foreign Sovereign Immunities Act ("FSIA" or the
25 "Act"), see 28 U.S.C. §§ 1330(a), 1603-1605, to dismiss the action
26 for lack of subject matter jurisdiction, finding that Ziraat is an
27 agency or instrumentality of a foreign state within the meaning of
- 2 -
1 the Act and is immune from this sui t because the acts on which
2 Guirlando's claims were based did not "cause[] a direct effect in
3 the Uni ted States," 2 8 U. S. C. § 1605 (a) (2). On appeal, Guirlando
4 contends that the district court erred in concluding that Ziraat's
5 acts did not cause a direct effect in the United States. For the
6 reasons that follow, we reject Guirlando's contentions and affirm
7 the judgment of the district court.
8 I. BACKGROUND
9 The status of Ziraat as an instrumentality of the
10 government of Turkey is not disputed. The following description
11 of the events on which Guirlando's claims are based is drawn from
12 the allegations of the amended complaint ("Complaint"), which are
13 accepted as true for purposes of reviewing this Rule 12 (b) (1)
14 dismissal.
15 A. The Events
16 In Port Jefferson, New York, in October 2006, Guirlando, a
17 67-year-old United States citizen, married Mevlut Cicek, a citizen
18 of Turkey who was not legally present in the United States. In
19 March 2007, Cicek disappeared wi thout notice. He thereafter
20 telephoned Guirlando, explained that he had been deported to
21 Turkey, and asked her to move to Turkey to join him. Guirlando
22 sold her house and car; in May 2007 she flew to Turkey, bringing a
23 check drawn on a New York branch of Citibank payable to herself in
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1 the amount of $251,156.63, representing the proceeds from those
2 sales and the entire balance of her Citibank account--in essence,
3 her "life savings." (Complaint ~ 8.)
4 When Guirlando arrived in Cicek I s home town of Adana,
5 Turkey, Cicek took her to the Adana branch of Ziraat, where he was
6 "well known to the Manager and other executive level personnel."
7 (Id. ~ 9.) Guirlando informed English-speaking employees of
8 Ziraat that she wished to open an individual account and deposit
9 her check into it. She alleges that the Bank employees told her,
10 falsely, that she could not open an account without a Turkish
11 identification number; they thus persuaded her to open a joint
12 account with Cicek. In addition, without informing Guirlando of
13 the availabili ty of an account from which wi thdrawals could be
14 made only by the owners jointly, the Ziraat employees had her sign
15 forms and signature cards for a j oint account of a "disj uncti ve
16 character," allowing wi thdrawals to be made by one owner wi thout
17 the consent of the other. (Id. ~ 11.) The forms and signature
18 cards were entirely in Turkish, and Guirlando was unaware that her
19 money could be withdrawn from the account without her signature.
20 The Ziraat employees promised to telephone Guirlando as
21 soon as the deposited funds became available; instead, once the
22 funds had arrived, they informed Cicek. Cicek promptly went to
23 the Bank and commenced wi thdrawing money from the account; he
24 withdrew more than $200,000 in a series of transactions completed
25 in a single day. (See id. ~ 16.)
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1 "Whi cek was at Ziraat Bank withdrawing the funds,
2 Cicek's adult daughter informed G[ui]rlando that Cicek had gone to
3 the bank to steal money_ II (Complaint ~ 17.) After the Bank
4 confirmed that had made withdrawals, Guirlando promptly
5 withdrew the remaining balance, approximately $50,000. She
6 subsequently returned to the United States and commenced the
7 present action against raat.
8 In addition to the above allegations, Guirlando alleged on
9 information and bel
10 that at the time when she opened her Ziraat Bank
11 account, the manager and executive personnel at
12 Ziraat Bank knew that Cicek was a criminal and a
13 swindler, and that his marriage to G [ui] rlando was
14 bigamous and void because Cicek was already married
15 to a Turkish woman when he married G[ui]rlando. The
16 Ziraat employees expected to profit from Cicek
17 defrauding G[ui]rlando.
18 (Id. ~ 19.) The Complaint asserted that, as a resul t of the
19 conduct of Ziraat's employees with respect to the opening of the
20 account for the deposit of Guirlando's check, the Bank was liable
21 for negligence, negligent and ional misrepresentations and
22 omissions, breach of the covenants good faith and fair dealing!
23 and breach of fiduciary duty.
24 B. Ziraat's Motion To Dismiss and the Ruling of the District Court
25 Ziraat moved to dismiss the Complaint on various grounds,
26 including lack of subject matter jurisdiction. In support of its
27 motion, it submitted a declaration by its First Legal Counsel
28 stating, inter alia, that Ziraat is a joint-stock company wholly
29 owned by the government of Turkey Declaration of Yurdagul
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1 Ruzgar dated February 8, 2008, ~ 2), and that its historical roots
2 "date back to the Ottoman Empire when it was formed as the first
3 agricultural financial institution founded and guaranteed by the
4 state" (id. ~ 4) . Ziraat argued, inter alia, that it is thus an
5 instrumentality of a foreign state and hence entitled to immunity
6 under the FSIA. Guirlando did not dispute Ziraat's status as an
7 instrumentality of a foreign state within the meaning of the FSIA;
8 but she argued that Ziraat lacked immuni ty under that statute
9 because the actions of the Bank's employees caused a direct effect
10 in the United States by causing the payment of approximately a
11 quarter of a million dollars from Guirlando's Citibank account in
12 New York.
13 In an Order of Dismissal dated December 15, 2008, the
14 district court granted Ziraat' s motion to dismiss for lack of
15 subject matter jurisdiction under the FSIA. See Guirlando v. T.C.
16 Ziraat Bankasi, A.S., No. 07 Civ. 10266, 2008 WL 5272195 (S.D.N.Y.
17 Dec. 15, 2008) ("Guirlando"). The court rejected Guirlando's
18 contention that Ziraat's actions had a direct effect in the United
19 States. It noted that this Court had ruled that the FSIA' s
20 "'commercial activity'" exception did not apply where "'all
21 legally significant acts'" took place in the foreign country and
22 the only alleged '" direct effect'" in the United States was
23 " , [t] hat the money came from a bank account in New York.'" Id.
24 at *4 (quoting Antares Aircraft, L.P. v. Federal Republic of
25 Nigeria, 999 F. 2d 33, 36 (2d Cir. 1993), cert. denied, 510 U. S.
26 1071 (1994)). Here, instead, the district court found that "all
- 6 -
1 'legally significant' acts" by Ziraat "took place in Turkey, where
2 Plaintiff opened the joint bank account, and where all of
3 [Ziraat's] allegedly unlawful behavior occurred," Guirlando, 2008
4 WL 5272195, at *4. The court concluded that "the sole act
5 connected to the United States in the instant matter, the drawing
6 of a check on a bank in New York, is not legally significant, as
7 it was entirely fortuitous and entirely unrelated to the liability
8 of [Ziraat]," id. (internal quotation marks omitted) .
9 Judgment was entered dismissing the Complaint.
10 Guirlando's motion for reconsideration pursuant to Fed. R. Civ. P.
11 59(e) and 60(b) was denied, and this appeal followed.
12 II. DISCUSSION
13 On appeal, Guirlando challenges the judgment of dismissal
14 (as well as the denial of her motion for reconsideration--although
15 she proffers no separate arguments as to that denial), contending
16 principally that either the "payment of the $251,156.63 out of the
17 New York Citibank account" (Guirlando brief on appeal at 35) or
18 her impoverishment "as an American citizen" (id. at 41; see also
19 Guirlando reply brief on appeal at 6-7) constitutes a direct
20 effect in the United States sufficient to meet this Court's
21 "legally significant act" test. Alternatively, she urges this
22 Court to abandon the "legally significant act" test and rule that
23 the Citibank payment or her impoverishment constitutes the
- 7 -
1 requisite direct effect. (See Guirlando brief on appeal at 37-38,
2 45; Guirlando reply brief on appeal at 18-19.)
3 Given the absence of any dispute as to the status of
4 Ziraat as a foreign state wi thin the meaning of the FSIA, see
5 28 U.S.C. §§ 1603(a) and (b), and Ziraat's acceptance of the
6 allegations of the Complaint as true for purposes of its Rule
7 12(b) (1) motion, Guirlando's contentions present only questions of
8 law, which we review de novo. See generally Virtual Countries,
9 Inc. v. Republic of South Africa, 300 F.3d 230, 235 (2d Cir. 2002)
10 ("Virtual Countries"). For the reasons that follow, we rej ect
11 Guirlando's contentions.
12 A. The FSIA Meaning of "Direct Effect in the United States"
13 The FS IA '" provides the sole basis for obtaining
14 jurisdiction over a foreign state in the courts of this country.'"
15 Saudi Arabia v. Nelson, 507 U.S. 349, 355 (1993) (quoting
16 Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428,
17 443 (1989)). The Act provides, in general, that the federal
18 district courts have subject matter jurisdiction over "any nonjury
19 civil action against a foreign state as defined in section 1603(a)
20 of this title as to any claim for relief in personam with respect
21 to which the foreign state is not enti tIed to immuni ty ei ther
22 under sections 1605-1607 of this title or under any applicable
23 international agreement." 28 U.S.C. § 1330 (a) (emphasis added).
24 Section 1605(a) (2), known as the "commercial activity
25 exception", provides that
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1 (a) A foreign state shall not be immune from the
2 jurisdiction of courts of the United States or of the
3 States in any case--
4
5 (2) in which the action is based [1] upon a
6 commercial activity carried on in the United
7 States by the foreign state; or [2] upon an act
8 performed in the United States in connection
9 with a commercial activity of the foreign state
10 elsewhere; or [3] upon an act outside the
11 territory of the United States in connection
12 with a commercial activity of the foreign state
13 elsewhere and that act causes a direct effect in
14 the United States .
15 28 U.S.C. § 1605(a) (2) (emphases added). The phrase "'based
16 upon [] , is read most naturally" to introduce "those
17 elements of a claim that, if proven, would entitle a plaintiff to
18 relief under his theory of the case." Nelson, 507 U. S. at 357
19 (construing first clause of § 1605 (a) (2) ) . As is plain from the
20 language of the section, each of its three clauses describes
21 different categories of conduct for which the foreign state is
22 denied immunity. Only the third clause is at issue here.
23 To be a "direct" effect wi thin the meaning of the third
24 clause of the commercial activity exception, the impact need not
25 be either substantial or foreseeable, see Republic of Argentina v.
26 Weltover, Inc., 504 U.S. 607,617-18 (1992) ("Weltover II"), aff'g
27 941 F.2d 145 (2d Cir. 1991) ("Weltover I"); rather, "an effect is
28 'direct' if it follows 'as an immediate consequence of the
29 defendant's activity, '" Weltover II, 504 U.S. at 618
30 (quoting Weltover I, 941 F.2d at 152). In Weltover I, we
31 indicated that, by "immediate," we meant that, between the foreign
32 state's commercial activity and the effect, there was no
- 9 -
1 "intervening element." 941 F.2d at 152; see also Martin v.
2 Republic of South Africa, 836 F.2d 91, 95 (2d Cir. 1987)
3 ("Martin") ("The common sense interpretation of a 'direct effect 'll
4 within the meaning of § 1605(a) (2) "is one which has no
5 intervening element, but, rather, flows in a straight line without
6 deviation or interruption. II (other internal quotation marks
7 omitted)). We have held that lithe requisite immediacy" is lacking
8 where the alleged effect II depend [s] crucially on variables
9 independent of ll the conduct of the foreign state. Virtual
10 Countries, 300 F.3d at 238.
11 This Circuit I s reference to a Illegally significant act II
12 test had its origin in an effort to determine whether the direct
13 impact of a foreign state1s foreign commercial activity was felt
14 lIin the United States. II In Weltover I, a breach-of-contract suit
15 against the Republic of Argentina for unilaterally extending the
16 time for payments on bonds it had issued, brought by bondholders
17 who had designated New York as the place of payment, we began our
18 inquiry as to situs by stating that
19 [i]n determining where the effect is felt
20 directly, courts often look to the place where
21 legally significant acts giving rise to the claim
22 occurred. See Zedan v. Kingdom of Saudi Arabia, 849
23 F. 2d 1511, 1515 (D. C. Cir .1988) (legally significant
24 event must occur in the United States). We have
25 stated that II [a] n injury to a corporation occurs in
26 some legally significant situs, for instance, . a
27 place designated for performance of a contract."
28 Weltover I, 941 F.2d at 152 (quoting International Housing Limited
29 v. Rafidain Bank Iraq, 893 F.2d 8, 11 n.3 (2d Cir. 1989)
30 (II International Housing")). We concluded that whereas there was
- 10 -
1 no FSIA jurisdiction over the contract dispute in International
2 Housing "based, in large measure, on the fact that '[p] ayment in
3 New York City was not a contractual requirement, '" Weltover I, 941
4 F. 2d at 152 -53 (quoting International Housing, 893 F. 2d at 12),
5 there was FSIA jurisdiction in Weltover I because
6 the contract gave plaintiffs the option to call for
7 payment in New York. Plaintiffs exercised that
8 option. The legally significant act was defendants'
9 failure to abide by the contractual terms; i.e., to
10 make payments in New York. The effects occurred, in
11 the first instance, in New York, when the plaintiffs'
12 accounts were not credited with the outstanding
13 amount of u.s. dollars. As such, the act of
14 nonpayment caused a direct effect in the United
15 States.
16 941 F.2d at 153 (emphases added) .
17 Thus, in ruling that a "legally significant act" occurred
18 in the United States, Weltover I meant that, because the contracts
19 required payment to be made in the United States, the nonpayment
20 constituting the breach occurred in the United States. See also
21 Virtual Countries, 300 F.3d at 239 (" [A]n anticipatory contractual
22 breach occurs 'in the United States' for the jurisdictional
23 purposes of § 1605(a) (2) if performance could have been required
24 in the United States and then was requested there."). Our
25 conclusion in Weltover I that a foreign state's failure to make
26 payment in the United States as required by contract caused a
27 direct effect in the United States within the meaning of
28 § 1605(a) (2) was affirmed by the Supreme Court in Weltover II, 504
29 U.S. at 617-19, albeit without comment on our use of the "legally
30 significant act" lang'uage.
- 11 -
1 In the meantime, prior to the decision in Weltover II, the
2 "legally significant act" formulation used in Weltover I, was used
3 in Antares Aircraft, L.P. v. Federal Republic of Nigeria, 948 F.2d
4 90 (2d Cir. 1991) ("Antares I"), vacated and remanded for
5 reconsideration in light of Weltover II by 505 U.S. 1215 (1992).
6 Antares I was an action for conversion, brought by a United States
7 partnership whose sole asset was an airplane that had been
8 detained for some five months by an instrumentality of the Federal
9 Republic of Nigeria and was not released until Antares paid
10 airport parking and landing fees allegedly owed by Antares's
11 lessee. In affirming dismissal of the action for lack of subject
12 matter jurisdiction, we noted that the detention undoubtedly had a
13 direct effect on Antares; but as "the 'legally significant act'--
14 the detention and alleged conversion of the aircraft--occurred in
15 Nigeria," we concluded that "the effect of the defendants' conduct
16 abroad was not fel t directly 'in the Uni ted States,' but in
17 Nigeria." Antares I, 948 F.2d at 95 (emphases added).
18 The "legally significant act" (emphasis added) formulation
19 has caused some confusion both from a statutory interpretation
20 standpoint and- -principally in the breach-of - contract context --
21 from a metaphysical standpoint. First, interpreting the third
22 clause of § 1605 (a) (2) - -which denies a foreign state immunity for
23 a claim "based upon an act outside the terri tory of the
24 United States in connection with a commercial activity of the
25 foreign state elsewhere and that act causes a direct effect in the
26 United States" (emphases added) --to mean that the foreign state
- 12 -
1 must have performed some legally significant act "in" the United
2 States would conflate the provisions of the third clause with
3 those of the second clause of that section. The second clause
4 expressly denies immunity to a foreign state for "an act performed
5 in the United States in connection with a commercial activity of
6 the foreign state elsewhere," § 1605 (a) (2) (emphasis added).
7 Since" [d] istinctions among descriptions juxtaposed against each
8 other are naturally understood to be significant," Nelson, 507
9 U.S. at 357, we do not interpret the "legally significant act"
10 test as one requiring that the foreign state have "performed" an
11 act "in the United States."
12 Second, the metaphysical conundrum posed by Weltover I' s
13 suggestion that, in order to be denied immunity under the third
14 clause of § 1605 (a) (2), a foreign state must have performed a
15 legally significant "act" "in the Uni ted States" is that that
16 formulation equated acts with omissions. Thus, when Weltover I
17 stated that the legally significant "act" depriving the Republic
18 of Argentina of immunity "was defendants' failure to abide by the
19 contractual terms"--i.e., the "act of nonpayment"--941 F.2d at 153
20 (emphases added), its shorthand phrasing equated an act with a
21 non-act. And although some cases state, with respect to such a
22 nonpayment, that "[t] he 'legally significant' act was the
23 breach that occurred in the United States," Antares Aircraft, L.P.
24 v. Federal Republic of Nigeria, 999 F.2d 33,36 (2d Cir. 1993)
25 ("Antares II") (emphases added), cert. denied, 510 U. S. 1071
26 (1994), the effect is the same because the reference is to a
- 13 -
1 "payment [that] was to take place. . but did not," id. at 35.
2 Thus, the "legally significant act" formulation causes conceptual
3 problems in the context of contract suits, because it conflates an
4 act wi th the act's effect. The decision by a foreign sovereign
5 not to perform is itself an act, but it is not an act in the
6 United States; it is an act in the foreign state. A decision not
7 to act, standing by itself, does not have an effect until there
8 has been an anticipatory repudiation or a failure to act at the
9 time required. And although the failure to act may have a legally
10 significant effect in the place where the act was to have been
11 performed, the failure to act is not itself an act.
12 The "legally significant act" formulation poses less of a
13 conundrum in the context of tort actions. In Antares I I,
14 following the remand of Antares I for reconsideration in light of
15 Weltover II, we noted that the Supreme Court's opinion in
16 WeI tover I I had not expressed a view on WeI tover I' s "legally
17 significant act" formulation but that Weltover II had used a
18 similar analysis in finding it decisive that the contract had been
19 breached in New York, the contractually designated place of
20 performance. See Antares II, 999 F.2d at 36. Focusing on the
21 tort claim brought by Antares for the conversion of its airplane,
22 we noted that "[i] n tort, the analog to contract law's place of
23 performance is the locus of the tort," id. Although recognizing
24 the possibility that a foreign tort could have "sufficient
25 contacts with the United States to establish the requisite 'direct
26 effect' in this country," we concluded that the conversion before
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1 us was not such a tort because all of the "legally significant
2 acts took place in Nigeria." Id.
3 The aircraft was registered in Nigeria. There is no
4 evidence that the use of the aircraft was related to
5 substantial commerce with the United States. The
6 detention of, and physical damage to, the plane
7 happened in Nigeria. The alleged conversion thus
8 occurred in Nigeria. Moreover, the negotiations
9 over, and the payment of, the outstanding fees
10 occurred in Nigeria and utilized Nigerian currency.
11 That the money came from a bank account in New
12 York is a fact but one without legal significance to
13 the alleged tort. The Nigerian authori ties were
14 indifferent to the geographic location of the source
15 of the money used to pay the fees. Their demands
16 would have been satisfied had Antares paid from a
17 London checking account or borrowed the funds from a
18 bank in Lagos. Wherever the source of the money,
19 payment had to be in Nigeria, just as the payment in
20 Weltover had to be in New York. The tort thus began
21 in Nigeria wi th the detention of the aircraft and
22 ended in Nigeria wi th the payment of the money.
23 Unlike Weltover, where the parties had agreed that
24 performance was to occur in New York, the sole act
25 connected to the United States in the instant matter,
26 the drawing of a check on a bank in New York, was
27 entirely fortui tous and entirely unrelated to the
28 liability of the appellees.
29 (emphases added) . Thus, we stated that " [u]pon
30 reconsideration, we again affirm [the dismissal] because there was
31 no' direct effect' of appellees' legally significant conduct in
32 the United States . " Id. at 34.
33 We view this last sentence's prepositional phrase "in the
34 United States" as pertaining to "'direct effect'," rather than to
35 "conduct". That is, the Antares II reconsideration did not state
36 a requirement that (for FSIA jurisdiction) the foreign state must
37 have engaged in conduct in the United States, but rather stated
38 the conclusion that the defendant's legally significant conduct--
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1 all of which occurred in Nigeria--had had no direct effect in the
2 United States. Indeed, our post-Weltover I cases have described
3 our" 'legally significant acts' test" as meaning simply that the
4 defendant's conduct that is alleged to have had a direct effect in
5 the United States must be legally significant:
6 This test requires that the conduct having a direct
7 effect in the United States be legally significant
8 conduct in order for the commercial activity
9 exception to apply. See Hanil Bank [ v. PT. Bank
10 Negara Indonesia, (Persero) 1, 148 F. 3d [127,]
11 133[ (2d Cir. 1998)]; see also Antares Aircraft, L.P.
12 v. Federal Republic of Nigeria, 999 F.2d 33, 34-35
13 (2d Cir.1993).
14 Filetech S.A. v. France Telecom S.A., 157 F.3d 922, 931 (2d Cir.
15 1998) (emphases added); see also Virtual Countries, 300 F.3d
16 at 240-41. This interpretation is also consistent with tort and
17 contract cases cited in Weltover I.
18 For example, in Martin, cited in Weltover I for the
19 proposi tion that in order to be direct, an effect need not be
20 substantial, see Weltover I, 941 F.2d at 152, the plaintiff, a
21 United States citizen, was injured in an accident in South Africa,
22 and he alleged that racially motivated neglect and medical
23 malpractice by employees of a state-owned hospital rendered him a
24 quadriplegic, see Martin, 836 F.2d at 92. We noted that
25 the effects of the foreign state's acts occurred
26 outside the Uni ted States, in South Africa, where
27 appellant sustained personal inj uries . [T] he
28 injury to appellant occurred in South Africa where he
29 became quadriplegic. [I]t cannot be said that
30 the effects of South Africa's acts occurred "in the
31 United States".
32 Id. at 94. There was no effect in the United States until Martin
33 returned to the United States; and there was no legally
- 16 -
1 significant act by the foreign state causally connected to that
2 return.
3 Similarly, in Zedan v. Kingdom of Saudi Arabia, 849 F.2d
4 1511 (D.C. Cir. 1988) ("Zedan"), the case cited by Weltover I in
5 first articulating the II legally significant act 11 test in this
6 Circuit, the plaintiff, a United States citizen, had entered into
7 a contract in Saudi Arabia to perform services for an agency of
8 that government, the Ministry of Communications, in Saudi Arabia.
9 That agency subsequently refused to pay the agreed compensation,
10 and Zedan returned to the United States unpaid. The Zedan court
11 noted that
12 [a]ppellant's injury, while financial rather than
13 personal, was def ini tely suffered in Saudi Arabia,
14 for it was there that the Ministry of Communications
15 breached its contract wi th him. While it is true
16 that the breach continued after appellant left Saudi
17 Arabia, the breach's effect in the United States
18 cannot be said to be direct, for this effect is due
19 to an intervening event--appellant's return here.
20 Zedan, 849 F.2d at 1515. The breach having occurred, its
21 continuation was not legally significant.
22 These holdings in Martin and Zedan also reflect the
23 principle that the mere fact that a foreign state's commercial
24 activity outside of the United States caused physical or financial
25 injury to a United States citizen is not itself sufficient to
26 constitute a direct effect in the United States. In the Antares
27 litigation, for example, the plaintiff contended that Nigeria's
28 acts had had the requisite direct effect in the United States
29 because Antares was a United States partnership and had suffered
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1 financial loss by having to pay the Nigerian fee demands. We
2 twice rejected this proposition:
3 [T]he direct effect of detaining the plane was
4 . the loss of the use of the aircraft and the
5 physical damage it suffered in Nigeria, and not, as
6 Antares alleges, the financial loss that Antares
7 suffered in the United States. The transfer of
8 funds out of Antares' New York bank account, and the
9 resultant financial loss to the partnership, are not
10 by themselves sufficient to place the effect of the
11 defendants' conduct "in the United States" within the
12 meaning of § 1605 (a) (2) .
13 Antares I, 948 F.2d at 95 (first emphasis in original; second
14 emphasis ours). We elaborated in Antares II:
15 [T]he fact that an American individual or firm
16 suffers some financial loss from a foreign tort
17 cannot, standinG alone, suffice to trigger the
18 exception. See Martin v. Republic of South Africa,
19 836 F. 2d 91 (2d Cir .1987) (finding that financial
20 injury of person injured abroad is not a "direct
21 effect" in United States); Zernicek v. Brown & Root,
22 Inc., 826 F.2d 415, 418 (5th Cir.1987)
23 ( "consequent ial damages [from personal inj ury tort
24 abroad] are insufficient to constitute a 'direct
25 effect in the United States' for purposes of
26 abrogating sovereign immunity"), cert. denied, 484
27 U.S. 1043, 108 S.Ct. 775, 98 L.Ed.2d 862 (1988);
28 Australian Gov't Aircraft Factories v. Lynne, 743
29 F.2d 672, 675 (9th Cir.1984) (similar), cert.
30 denied, 469 U.S. 1214, 105 S.Ct. 1189, 84 L.Ed.2d 335
31 (1985); Colonial Bank v. Compagnie Generale Maritime
32 et Financiere, 645 F.Supp. 1457, 1465 (S.D.N.Y.1986)
33 (finding American bank's loss on ship mortgage from
34 ship seizure to be indirect effect) .
35 If a loss to an American individual and firm
36 resulting from a foreign tort were sufficient
37 standing alone to satisfy the direct effect
38 requirement, the commercial activity exception would
39 in large part eviscerate the FSIA' s provision of
40 immunity for foreign states. Many commercial
41 disputes, like the present one, can be pled as the
42 torts of conversion or fraud and would, if appellant
43 is correct, result in litigation concerning events
44 with no connection with the United States other than
45 the citizenship or place of incorporation of the
46 plaintiff. Similarly, personal injury actions based
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1 on torts with no connection with this country, except
2 for the plaintiff's citizenship, might be brought
3 under appellant's theory. For example, an American
4 citizen injured in a foreign city by a government-
5 owned bus company might sue here if the commercial
6 acti vi ty exception is triggered solely by the fact
7 that the citizen's wealth is diminished by the
8 accident. We find it difficult to characterize such
9 an effect, standing alone, as "direct" or to read
10 into this otherwise somewhat restrictive legislation
11 an all-encompassing jurisdiction for foreign torts.
12 Antares II, 999 F. 2d at 36-37 (emphases added). Accord Virtual
13 Countries, 300 F.3d at 240 (the "theory [] that any 'u.s.
14 corporation's financial loss constitute[s] a direct effect in the
15 United States[]' . is plainly flawed" (emphasis in original)).
16 B. Guirlando's Claims
17 As described in Part I.A. above, Guirlando's Complaint
18 alleges principally that, in Turkey, Ziraat employees (1) told
19 her, falsely, that she could not open an individual checking
20 account into which to deposi t her Ci tibank check, (2) caused her
21 to open a disjunctive joint account from which funds could be
22 wi thdrawn by one j oint owner wi thout the consent of the other,
23 rather than an account for which the consent of both owners would
24 be required for a withdrawal, and (3) notified Cicek, rather than
25 Guirlando, when the funds had arrived in the new Ziraat account.
26 She asserts that these acts had a direct effect in the Uni ted
27 States both because they resul ted in the payment of $251, 156.63
28 from her New York Citibank account and because she lost more than
29 $200,000 and is an American citizen. Regardless of how the
30 "legally significant act" test is formulated, we cannot conclude
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1 that either event constituted a direct effect in the United
2 States within the meaning of § 1605 (a) (2) .
3 Guirlando' s contention that the requisi te direct effect
4 occurred because she "returned to the United States where she
5 lives in much reduced circumstances" (Complaint ~ 18) is quickly
6 disposed of for two reasons. First, it is foreclosed by the
7 authorities discussed in Part II.A. above. " [T] he fact that an
8 American individual suffers some financial loss from a
9 foreign tort cannot, standing alone, suffice to trigger the
10 [commercial activity] exception." Antares II, 999 F.2d at 36.
11 Second, Guirlando's financial loss was not a direct result of the
12 Bank's denying her the right to open an individual account, for
13 between that conduct and her impoverishment there was an
14 intervening element, to wit, Cicek's larcenous withdrawals.
15 We note also that Ziraat's act of notifying Cicek that the
16 funds had arrived in the new Turkish bank account from New York
17 could not have had the requisi te direct effect in the Uni ted
18 States both because (a) financial injury to a United States
19 citizen is not a legally sufficient effect, and because (b) the
20 funds' arrival in Turkey plainly could not have occurred before
21 the transfer of the funds from the Citibank account in New York,
22 and hence notification of their arrival could not have caused that
23 transfer. Moreover, we cannot see that such a notification had
24 any legal significance. The joint account had been established;
25 the notion that the bank was not enti tIed to notify one of the
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1 owners of the arrival of funds in the account is not supported by
2 any authority of which we are aware.
3 Guirlando's contention that the requisite direct effect in
4 the United States consisted of the transfer of the funds out of
5 her New York Citibank account requires somewhat more discussion,
6 but it suffers from mul tiple flaws. First, we note that her
7 complaint that Ziraat caused her to open a disjunctive joint
8 account, rather than a two-signature account from which
9 withdrawals could not be made without the consent of both owners,
10 loses considerable significance upon scrutiny. Although the
11 latter type of account would have prevented Cicek from withdrawing
12 funds wi thout Guirlando' s knowledge and consent, it would also
13 have given him control over Guirlando's own ability to withdraw
14 the funds. Thus, the two-signature joint account that Guirlando
15 purports to have preferred would have deprived Guirlando of
16 independent access to her money. Her more logical complaint is
17 that Ziraat did not allow her to open an individual account.
18 Even as to Ziraat's refusal to allow Guirlando to open an
19 individual account, however, there are several flaws in the
20 contention that that conduct had a direct effect in the Uni ted
21 States. First, if Guirlando had deposi ted her check into an
22 individual account as she wished, her money still would have left
23 the United States. And while she argues that the transfer of her
24 money from New York had a direct effect in the United States, it
25 is clear from the face of the Complaint that that transfer is not
26 what caused Guirlando's injury. Upon the arrival of Guirlando's
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1 funds in Turkey, Guirlando had lost nothing. What caused her loss
2 were the acts of Cicek- -after the money had left the Uni ted
3 States--in withdrawing most of the money from the Turkish account
4 without Guirlando's consent.
5 Second, as held in the Antares litigation, although the
6 breach of an agreement "to pay [money] . . . in New York" has the
7 requisite direct effect in the United States, see Antares I, 948
8 F. 2d at 95 (describing WeI tover I, 941 F. 2d at 153) (emphases
9 added)," [t]he transfer of funds out of [a] New York bank account
10 [is] not [itself] sufficient to place the effect of [a]
11 defendant ['s] conduct 'in the United States' within the meaning of
12 § 1605 (a) (2) ," Antares I, 948 F. 2d at 95 (emphases added); see
13 also Antares II, 999 F.2d at 36.
14 Although Guirlando argues that United States Fidelity &
15 Guaranty Co. v. Braspetro Oil Services Co., No. 97 CIV. 6124, 1999
16 WL 307666 (S.D.N.Y. May 17, 1999) ("Braspetro"), denial of motion
17 to dismiss for lack of subject matter jurisdiction aff'd
18 substantially for the reasons stated in the district court
19 opinion, 199 F.3d 94, 97 (2d Cir. 1999), stands for the
20 proposition that '" [t]he fact that the plaintiffs, rather than the
21 defendants, are to make payment in the United States does not
22 diminish the effect in the Uni ted States'" (Guirlando brief on
23 appeal at 27 (quoting Braspetro, 1999 WL 307666, at *14 (emphasis
24 in brief omitted)), her reliance on Braspetro is misplaced. The
25 Braspetro plaintiffs, sureties that had issued performance bonds
26 for construction projects in Brazil, contended that the defendant
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1 instrumentalities of Brazil (II Petrobras/Brasoil") had caused
2 breaches of the underlying construction contracts and impaired the
3 plaintiffs' suretyship status. The sureties sought declaratory
4 relief as to their obligations under the performance bonds. There
5 are several differences between Braspetro and the present case.
6 To begin wi th, the commercial acti vi ty exception was applicable
7 regardless of whether the alleged conduct of Petrobras/Brasoil
8 had a direct effect in the United States because the first clause
9 of the commercial activity exception applied, the performance
10 bonds at issue having been negotiated in the United States. See
11 1999 WL 307666, at *12 (IIPetrobras/Brasoil allegedly negotiated
12 and procured performance bonds in New York. . understood to be
13 (although not contractually obliged to be) payable in New York II
14 and thus were "not immune from federal jurisdiction under the
15 FSIA" because such conduct was "sufficient to satisfy the first
16 clause of the commercial activity exception. II (emphasis added)).
17 Further, even wi th respect to the third clause of the
18 commercial activity exception, the sureties' potential obligation
19 to pay moneys from their New York accounts was not the only factor
20 considered by the court. The court noted the assertion that
21 Petrobras/Brasoil had caused the underlying construction contracts
22 to be breached by their conduct in New York, see id. at *14; see
23 also id. at *11 (Petrobras/Brasoil allegedly caused breaches "by
24 directing the premature and excessive payment of millions of
25 dollars from Brasoil's New York bank accounts to the [contractors]
- 23 -
1 for work that had not yet been performed and without the
2 plaintiffs' consent").
3 And most importantly, Guirlando's reliance on Braspetro is
4 misplaced because in Braspetro the nonperformance of the
5 contractors, triggering the plaintiff sureties' obligations to
6 make payments from their Uni ted States accounts, was caused by
7 the alleged wrongful conduct of the defendants. Here, in
8 contrast, transfer of Guirlando' s money from New York to Turkey
9 was the express goal of Guirlando herself--as she describes it:
10 As set forth in the Amended Complaint, Mrs.
11 G [ui] rlando walked into Ziraat Bank in Turkey, and
12 immediately announced her purpose of opening an
13 individual bank account into which she could deposit
14 a check drawn on her New York bank account and
15 payable to herself.
16 (Guirlando reply brief on appeal at 3; see also Guirlando brief
17 on appeal at 39 ("The drawing of the check on the bank in New York
18 . was Mrs. G[ui]rlando's only reason for opening an account at
19 Defendant Ziraat Bank.").) Having engaged Ziraat for the express
20 purpose of depositing her New York check into a new Turkish
21 account, an act that by its nature would resul t in her money
22 leaving the United States, Guirlando is not entitled to have the
23 courts deny immuni ty to Ziraat on the theory that it was the
24 conduct of Ziraat that caused that effect.
25 We note that the dismissal for lack of jurisdiction here
26 does not leave Guirlando wi thout recourse. In arguing in the
27 district court that the United States is an inappropriate forum,
28 Ziraat stated,
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1 [a] s stated in the accompanying Declaration of
2 Yurdagul Ruzgar, First Legal Counsel to the Bank,
3 Ziraat Bankasi is amenable to suit in Turkey and will
4 not challenge the appropriateness of Turkey as the
5 forum for litigating this action.
6 (Ziraat Memorandum of Points and Authorities in Support of
7 Defendant's Motion To Dismiss at 7.)
8 CONCLUSION
9 We have considered all of Guirlando' s arguments on this
10 appeal and have found them to be wi thout meri t . The judgment
11 dismissing the action for lack of subject matter jurisdiction
12 under the FSIA is affirmed.
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