ALBANY, N.Y. (Legal Newsline) - A Lebanese bank that paid $580 million for the assets of Lebanese Canadian Bank also bought New York jurisdiction over lawsuits claiming LCB financed terrorism, the state’s highest court ruled.
Answering a question posed by the federal Second Circuit Court of Appeals, the New York Court of Appeals said Société Générale de Banque au Liban SAL must defend itself against terrorism claims originally filed against LCB.
Société Générale, based in Beirut, argued it had no ties to New York since it merely purchased the assets of LCB and the two entities never formally merged. Not so, said the New York Court of Appeals: As a sophisticated corporation, Société Générale “would have been on notice” that by purchasing LCB’s liabilities it was also buying into personal jurisdiction in New York.
“Sophisticated corporate entities such as SGBL will undoubtedly engage in robust due diligence before agreeing to acquire all assets and liabilities of another entity,” Judge Caitlin Halligan wrote.
“In doing so, they should understand where jurisdiction over such liabilities may lie and the potential cost if ultimately found liable, and will presumably negotiate a purchase price that is discounted by that prospect.”
Plaintiffs representing 21 U.S. citizens sued LCB in 2008 over injuries and deaths from 2006 rocket attacks by Hizbollah attacks. The Second Circuit previously ruled LCB could be sued in New York for financing Hizbollah, but was undecided on whether that liability extended to Société Générale. The U.S. Treasury designated LCB a “primary money laundering concern” in February 2011 and Société Générale bought LCB’s asssets and liabilities in June of that year.
While LCB remains as a corporate entity it is insolvent, the court said, leaving the plaintiffs only Société Générale as a source of redress.