The World in U.S. Courts: Spring 2014 - Personal Jurisdiction
Plaintiff Richard Mann, a U.S. citizen, engaged in a "creative financial solution" designed and promoted by Defendant Euram Bank, an Austrian company, which was intended to create for Mann a tax deductible trading loss. Instead, the U.S. Internal Revenue Service disallowed the transaction and assessed $911,869 in tax penalties against Mann. Mann filed suit alleging breach of contract and fraud, among other claims, and moved to dismiss the action for lack of personal jurisdiction.
Mann alleged that he was contacted directly by Euram Bank at his home in North Carolina about the tax strategy and that the bank used a U.S. company to assist in its U.S. marketing. Because Mann conceded there was no basis for general jurisdiction, the court analyzed whether the bank was subject to specific personal jurisdiction arising out of its contacts with North Carolina. Although the bank executed a Loan Agreement with Mann, a North Carolina citizen, the court found Mann’s allegations of injury did not arise out of the Loan Agreement but instead from the flawed tax advice he allegedly received. Thus, the bank’s activities in marketing and promoting the Loan Agreement were irrelevant to the question of personal jurisdiction. Moreover, because Mann alleged North Carolina contacts by many other entities, but not Euram Bank, the court held that Mann had failed to allege sufficient facts, outside conclusory allegations, that Euram Bank had purposefully availed itself of the forum.