The opinion of the court was delivered by: STANLEY S. BROTMAN
Presently before the court are motions brought by defendants Bank Hapoalim and David Barr to dismiss the complaint for lack of personal jurisdiction and to grant partial summary judgment. For the reasons set forth below, the court holds that an assertion of jurisdiction over these two defendants would be inconsistent with constitutional due process. Because of this holding, the court does not consider the motion for partial summary judgment.
I. Background and Procedure
The present dispute arises out of a series of loan transactions between plaintiff Covenant Bank for Savings ("Covenant") and defendant Brad Cohen in July 1989.
Covenant alleges that it made loans to Brad Cohen in the amount of $ 690,000. These loans were allegedly evidenced by promissory notes dated October 26, 1990. Covenant claims that Brad Cohen has defaulted on all of these loans and asks the court to award damages. By its opinion and order dated September 25, 1992, this court instructed the clerk of the court to enter a default against Brad Cohen, pursuant to Federal Rule of Civil Procedure 55(a), for failure to defend the present action.
Covenant has also stated claims against defendants Bank Hapoalim ("Hapoalim") and David Barr, a former employee of Hapoalim. In count four of the complaint, Covenant alleges fraud in that Hapoalim and Barr defendants drafted and provided Covenant with a false credit report concerning Brad Cohen. Count five sounds in negligence, alleging that defendants violated their duty of care in giving false credit information. Both claims arise from an alleged conversation in July 1989 between the plaintiff bank and Mr. Barr.
For the purpose of determining the question of personal jurisdiction, the following facts are relevant.
Hapoalim is incorporated and has its principal place of business in Israel. Hapoalim also has branch offices in the states of New York, Pennsylvania, Massachusetts, Illinois, and California, as well as an agency located in Florida. Its Pennsylvania office is located in Philadelphia. Hapoalim does not maintain an office in New Jersey, nor is it registered to do business there. Hapoalim currently lends nearly $ 27 billion in loans worldwide, with about $ 1.76 billion in loans in the United States.
Hapoalim currently has approximately 41 loans outstanding to approximately 26 borrowers with New Jersey addresses. These loans amount to nearly $ 62 million, which equals 3.5 percent of Hapoalim's total American loan portfolio of $ 1.76 billion. None of these transactions with New Jersey residents was closed in New Jersey. Ten of the 26 New Jersey borrowers have secured their loans with real estate or personal property located in the state of New Jersey. Hapoalim employees come into the state of New Jersey "from time to time" for the purpose of meeting with New Jersey borrowers and examining collateral. Smith Aff. P 12.
In September 1991, Hapoalim placed a one-quarter page advertisement in The Jewish Community Voice, a newspaper published by the Jewish Federation of Southern New Jersey and circulated solely within the state of New Jersey. The advertisement, which included Hapoalim's Philadelphia office address and telephone number, stated: "Israel's #1 bank wishes you a Happy New Year." Def.'s Brief, exh. A. In April and June 1990, Hapoalim undertook a seven-day advertising campaign in The Philadelphia Inquirer for the purpose of soliciting time deposits from new customers. The campaign ran in the Inquirer's business section, which defendants acknowledge is included in editions of the paper distributed in Southern New Jersey. Karr Aff. P 6. However, defendants state, and plaintiff does not contest, that the Inquirer campaign did not target New Jersey customers and that Hapoalim was unaware at the time it initiated the campaign that the business section was distributed in Southern New Jersey.
Both Hapoalim and Mr. Barr allegedly had contact with New Jersey as a result of the events forming the basis of plaintiff's claim. Hapoalim, acting through Mr. Barr, communicated by telephone with plaintiff, a New Jersey bank, regarding the credit worthiness of Brad Cohen. This communication was initiated by Covenant. Compl. P 25.
Defendants ask this court to dismiss the claims against them for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). Plaintiff bears the burden of proving the existence of "sufficient contacts between the defendant[s] and the forum state to support jurisdiction." Provident National Bank v. California Federal Savings & Loan Association, 819 F.2d 434, 437 (3d Cir. 1987). This court may exercise personal jurisdiction over a party pursuant to New Jersey law and the Due Process clause. Giangola v. Walt Disney World Co., 753 F. Supp. 148, 154 (D.N.J. 1990). Because New Jersey extends its jurisdictional reach to the fullest limits permitted by the federal Constitution, the sole inquiry before this court is whether an assertion of personal jurisdiction over defendants Hapoalim and ...