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Accident Insurance Co., Inc. v. U.S. Bank National Association

United States District Court, D. South Carolina, Columbia Division

September 25, 2017

Accident Insurance Company, Inc., a South Carolina Corporation, Plaintiff,
U.S. Bank National Association and U.S. Bank Trust N.A., Defendants.


         This matter is before the court pursuant to Defendant U.S. Bank Trust's (“USBT”) Motion to Dismiss for lack of personal jurisdiction. (ECF No. 13.) Plaintiff Accident Insurance Company (“AIC”) opposed USBT's Motion (ECF No. 43), and filed a Motion for Jurisdictional Discovery (ECF No. 56). For the reasons set forth below, the court concludes that USBT is not subject to the court's personal jurisdiction, GRANTS USBT's Motion to Dismiss for lack of personal jurisdiction (ECF No. 13), and DENIES AIC's Motion for Jurisdictional Discovery (ECF No. 56).


         On July 22, 2016, AIC filed a Complaint for a jury trial against U.S. Bank National Association (“U.S. Bank”)[1] and its affiliate, USBT. (ECF No. 1.) AIC alleges that USBT breached various duties as trustee of the Destra Targeted Income Unit Investment Trust (“Destra UIT”), and asserts claims for breach of fiduciary duty (Count 4) and negligence/gross negligence (Count 5).[2](Id.)

         On September 9, 2016, USBT filed a Motion to Dismiss for lack of personal jurisdiction and failure to state a claim. (ECF No. 13.) As to personal jurisdiction, USBT asserted that it was not subject to general or specific jurisdiction in South Carolina. (ECF No. 13-1 at 13-19.) It submitted evidence showing, among other things, that USBT is not “at home” in South Carolina, and did not perform any of its obligations with respect to the Destra UIT in South Carolina. (Id.; see also ECF No. 13-2.)

         On November 17, 2016, AIC filed a response in opposition to USBT's Motion, conceding that general jurisdiction was lacking (ECF No. 43 at 10 n.1), but asserting that specific jurisdiction existed, primarily because USBT knew or should have known that units of the Destra UIT would enter a reinsurance trust account for which AIC was a beneficiary (Id. at 11-13). Alternatively, AIC asked for leave to conduct jurisdictional discovery so it could “supplement” its showing. (Id. at 17.)

         On December 23, 2016, USBT filed a Reply to AIC's response, asserting that AIC was not entitled to jurisdictional discovery because its request was based on speculation and conclusory assertions. (ECF No. 51 at 8.) USBT also explained, in part, that this court already rejected AIC's main theory of personal jurisdiction in a recent case. (Id. at 2-3) (citing and quoting Companion Prop. & Cas. Ins. Co. v. U.S. Bank Nat'l Ass'n, No. 3:15-cv-01300, 2016 WL 6781057, at *10 (D.S.C. Nov. 16, 2016) (holding that specific jurisdiction over USBT did not exist).

         On June 28, 2017, AIC renewed its request for jurisdictional discovery. (ECF No. 56.) AIC sought to “explore, ” among other things, USBT's “involvement in and approval of the decisions made in South Carolina that would have a direct impact in South Carolina.” (ECF No. 56-1 at 3.) This discovery would encompass USBT's business plans, trust agreements, trust asset acquisitions, contracts, licensing, the “hiring and firing of management and employees in South Carolina, ” and marketing. (Id.) Other topics included “the reporting to, approval, and accountability of South Carolina employees” and the “internal operations and corporate structures of U.S. Bank and USBT.” (Id.) On July 12, 2017, USBT filed a response in opposition to AIC's Motion, reasserting its position that AIC is not entitled to jurisdictional discovery. (ECF No. 57.) On July 19, 2017, AIC filed a Reply to USBT's response, asserting six bases for personal jurisdiction. (ECF No. 58.) On August 3, 2017, USBT filed a Sur-Reply to AIC's Reply, asserting that AIC's “new assertions are baseless and should be rejected.” (ECF No. 62.)


         The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332. AIC is organized and incorporated in the State of South Carolina, with its principal place of business in Lexington County, South Carolina. (ECF No. 1 at 1.) U.S. Bank is a wholly owned subsidiary of U.S. Bancorp, and is a national chartered bank with its principal place of business and headquarters in the State of Minnesota. (Id.) USBT is a wholly owned subsidiary of U.S. Bancorp and an affiliate of U.S. Bank. (Id.) Its principal place of business is in Wilmington, Delaware. (Id.) The amount in controversy in this matter exceeds $75, 000.00. (Id. at 2.)


         A federal district court in South Carolina will exercise personal jurisdiction over a defendant to the maximum extent permitted by the Due Process Clause of the Fourteenth Amendment. See S.C. Code Ann. § 36-2-803 (2012); Callum v. CVS Health Corp., 137 F.Supp.3d 817, 834 (D.S.C. 2015). Due process requires that the defendant have minimum contacts with the forum state “‘such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'” Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         When a defendant challenges the court's personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff has “the burden of proving” that jurisdiction exists “by a preponderance of the evidence.” In re Celotex Corp., 124 F.3d 619, 628 (4th Cir. 1997). There are two paths to personal jurisdiction that satisfy due process. The first path is “general jurisdiction.” For general jurisdiction to exist, the defendant must have contacts so substantial, continuous, and systematic with the forum that it may be sued there for any reason. Daimler AG v. Bauman, 134 S.Ct. 746, 761 (2014). The second path is “specific jurisdiction.” For specific jurisdiction to exist, “the defendant's suit-related conduct must create a substantial connection with the forum state.” Walden, 134 S.Ct. at 1121.

         Discovery under the Federal Rules of Civil Procedure is broad in scope and freely permitted. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 64 (4th Cir. 1993). A court has the discretion to deny jurisdictional discovery if a plaintiff offers only speculation or conclusory assertions about defendant's contacts with a forum state. Tuttle Dozer Works Inc. v. Gyro-Trac (USA), Inc., 463 F.Supp.2d 544, 548 (D.S.C. 2006). When the plaintiff's claim does not appear to be frivolous, a district court should ordinarily allow discovery on jurisdiction in order to aid the plaintiff in discharging the burden of establishing the court's jurisdiction. Cent. Wesleyan Coll. V. W.R. Grace & Co., 143 F.R.D. 628, 644 (D.S.C. 1992).

         IV. ...

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