Sohail Abdulla v. Southern Bank ( 2023 )

THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Sohail Abdulla, Appellant,
v.
Southern Bank, Respondent.
Appellate Case No. 2019-001142
Appeal From Aiken County
Maite Murphy, Circuit Court Judge
Opinion No. 5976
Submitted October 3, 2022 – Filed April 12, 2023
AFFIRMED
Tucker S. Player, of Player Law Firm, LLC, of Chapin,
for Appellant.
Mark Louis Wilhelmi, of Mark L. Wilhelmi P.C., of
Augusta, Georgia, for Respondent.
LOCKEMY, A.J.: Sohail Abdulla appeals an order from the circuit court
dismissing his case against Southern Bank for lack of personal jurisdiction. On
appeal, Abdulla argues (1) the circuit court's order contained numerous errors of
fact that were unsupported by the record, (2) the circuit court erred by finding
Southern Bank's delay in filing its motion to dismiss was reasonable under
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Maybank v. BB&T Corporation,1 and (3) two substantive errors of law controlled
the circuit court's decision. For the reasons stated below, we affirm.
FACTS/PROCEDURAL HISTORY
Prior to 2010, Abdulla resided in Augusta, Georgia, and at the commencement of
this litigation, he resided in Aiken County, South Carolina. Southern Bank is a
Georgia corporation with its main office in Burke County, Georgia.
In 1997, Abdulla placed jewelry, consisting of two gold and diamond rings, one
gold ring, and a platinum bar pin, in the vault of Southern Bank's Waynesboro,
Georgia branch. In 1998, Abdulla opened a business checking account with
Southern Bank, and it provided financing for Abdulla's business, Sportsman's Link,
Inc. (Sportsman's), a sporting goods store in Augusta, Georgia. Sportsman's was a
Georgia corporation, and Abdulla was the president and CEO.
In 2007, Sportsman's filed for Chapter 11 bankruptcy in the United States
Bankruptcy Court, Southern District of Georgia, Augusta Division, and the
bankruptcy was converted to a Chapter 7 bankruptcy proceeding on July 22, 2008.
In the bankruptcy proceeding, Southern Bank filed a proof of claim, a form used
by Southern Bank to indicate the amount of the debt owed by Abdulla on the date
of the bankruptcy filing, which stated it had a secured proof of claim in the amount
of $853,718; it subsequently filed an amended unsecured proof of claim for the
amount of $265,962.86.2
In February 2017, Abdulla filed a complaint against Southern Bank. He alleged
Southern Bank improperly converted jewelry he had provided to it, that served as
collateral for loans he obtained. He asserted jurisdiction was proper under the
state's long-arm statute. 3 The complaint further stated (1) Southern Bank provided
two proofs of claim to the bankruptcy court and (2) Southern Bank had notified the
bankruptcy court it held the jewelry in its vaults in each of those proofs of claim.
Abdulla alleged because he no longer had outstanding debts with Southern Bank, it
1
416 S.C. 541, 787 S.E.2d 498 (2016).
2
"[S]ecured or unsecured status in a bankruptcy refers to whether or not the
creditor has an interest in property of the bankrupt estate." Rock Hill Nat'l Bank v.
Honeycutt, 289 S.C. 98, 102, 344 S.E.2d 875, 877 (Ct. App. 1986)
3
S.C. Code Ann. § 36-2-803(A)(3) (Supp. 2022).
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should return the jewelry to him. He asserted Southern Bank claimed he removed
the jewelry in 2004, but he contended he never removed the jewelry.
In its answer, Southern Bank argued jurisdiction was improper under the long-arm
statute because (1) all loan agreements between Sportsman's and Southern Bank
were executed in Georgia; (2) Sportsman's was a Georgia corporation; and (3)
Southern Bank did not transact business with Abdulla or Sportsman's outside of
Georgia. Southern Bank stated it would file a separate motion to dismiss.
Southern Bank also indicated Abdulla "removed all items from the bank vault on
or about May 27, 2004, without permission or knowledge of the bank lending
officer(s)."
On May 19, 2017, Abdulla's counsel contacted Southern Bank's counsel and
inquired if it would be possible for Southern Bank to answer "some general
discovery requests" regarding the jewelry. Abdulla's counsel stated providing
discovery responses could "expedite the disposition" of the case and requested
proof Abdulla took the jewelry in 2004.
Southern Bank responded to Abdulla's interrogatories and requests for production.
It provided a description of the jewelry in an attached document. Southern Bank
stated two former employees released the pieces of jewelry to Abdulla on March 9,
2004, and Southern Bank provided a copy of a vault ledger log. The vault ledger
log stated "Abdulla, Sohail[,] jewelry 3 rings 1 brooch[,] 5/29/97[,] rel 3/9/04[,]
SH KSC."
Southern Bank filed a motion to dismiss for lack of personal jurisdiction, arguing
the circuit court lacked jurisdiction because (1) it had never transacted business in
South Carolina with Abdulla or Sportsman's, (2) all contractual business between it
and Abdulla and Sportsman's occurred in Georgia, (3) Abdulla was a resident of
Georgia during the time he transacted business with it, and (4) it had no physical
locations in South Carolina. Southern Bank further asserted the circuit court did
not have personal jurisdiction over it because it did not have the requisite minimum
contacts and did not purposefully avail itself of the privileges of conducting
business in South Carolina.
Ralph Dickey, president of Southern Bank, provided an affidavit in support of the
motion to dismiss. He stated Abdulla provided Georgia addresses for his personal
accounts and Sportsman's business account. According to Dickey, as a result of
the liquidation of Sportsman's, Southern Bank sustained a loss of $363,000.
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Dickey also attested Southern Bank did not have any physical locations in South
Carolina and had not conducted business with Abdulla in South Carolina.
Abdulla filed a response to Southern Bank's motion to dismiss. He argued (1)
Southern Bank asserted it had the jewelry in the proofs of claim filed with the
bankruptcy court; (2) the long-arm statute conferred jurisdiction because Southern
Bank committed an out-of-state tortious act that resulted in an in-state injury; and
(3) Southern Bank waived its defense by engaging in discovery and dilatorily filing
its motion.
On February 20, 2018, the parties submitted a consent motion for entry of a
scheduling order. The consent motion notified the circuit court that (1) Southern
Bank's primary witness was unavailable for a deposition in February because of a
surgery; (2) Southern Bank's motion to dismiss was scheduled for a hearing on
April 2, 2018, and would need to be heard before trial; and (3) a scheduling order
was necessary for the parties to complete discovery and proceed with Southern
Bank's motion to dismiss.
At his March 2018 deposition, Abdulla stated he had resided in Aiken since 2010.
Abdulla confirmed that prior to his departure to the Middle East in 2008, he had
lived in Georgia and never previously lived in South Carolina. When asked if he
and Southern Bank executed all the prior loan agreements in Georgia, Abdulla
answered affirmatively. He also confirmed Sportsman's was located in Augusta,
Georgia, before its dissolution. Abdulla stated that in 2010, he requested Southern
Bank provide him with an accounting and all documents it had it in its possession
related to his personal accounts, Sportsman's accounts, defaults, and bankruptcy
sales. When asked if he recalled going to the bank and removing the jewelry,
Abdulla stated the vault ledger log did not contain his signature and asked how
could he remove items that were collateral.
Abdulla filed an affidavit stating he had been a resident of South Carolina since
2010. He asserted Southern Bank filed proofs of claim that stated it held the
jewelry as collateral. According to Abdulla, in 2010 and in 2016, he requested all
documents and an accounting of his activities with Southern Bank but was "largely
ignored." He further attested that after his request in 2016, Southern Bank
informed him the items were removed in 2004.
At the hearing on the motion to dismiss, the parties raised substantially similar
arguments as they had in their motions and responses. The circuit court
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subsequently dismissed Abdulla's complaint for lack of personal jurisdiction. The
circuit court determined Southern Bank did not have contact with Abdulla after he
moved to South Carolina and they only conducted business with him while he was
a Georgia resident. Further, it found Southern Bank did not waive its defense
under Maybank. It held Southern Bank responded to Abdulla's discovery requests
to expedite the case, depositions were conducted to determine the jurisdictional
issue, and Southern Bank did not submit any discovery requests of its own. The
circuit court concluded Abdulla did not establish personal jurisdiction in his
complaint or in his affidavit and he could not "satisfy the requirements of due
process," which would subject Southern Bank to the jurisdiction of the court.
Abdulla filed a motion to reconsider, which the circuit court denied. This appeal
follows.
ISSUES ON APPEAL 4
1. Did the circuit court's decision contain numerous errors of fact that were wholly
unsupported by the record?
2. Did the circuit court err in finding Southern Bank's delay in filing its motion to
dismiss was reasonable under Maybank?
3. Was the circuit court's decision controlled by two substantive errors of law and
should it be reversed?
STANDARDS OF REVIEW
"The question of whether a court may exercise personal jurisdiction over a
nonresident defendant is one that must be resolved upon the facts of each particular
case." Hidria, USA, Inc. v. Delo, 415 S.C. 533, 539, 783 S.E.2d 839, 842 (Ct.
App. 2016). "The decision of the [circuit] court should be affirmed unless
unsupported by the evidence or influenced by an error of law." Cockrell v.
Hillerich & Bradsby Co., 363 S.C. 485, 491, 611 S.E.2d 505, 508 (2005).
"It is well-settled that the party seeking to invoke personal jurisdiction over a non-
resident defendant via our long-arm statute bears the burden of proving the
existence of personal jurisdiction." Moosally v. W.W. Norton & Co., 358 S.C. 320,
327, 594 S.E.2d 878, 882 (Ct. App. 2004). "At the pretrial stage, the burden of
4
We address issues one and three together.
16
proving personal jurisdiction over a nonresident is met by a prima facie showing of
jurisdiction either in the complaint or in affidavits." Id. at 328, 594 S.E.2d at 882.
"When a motion to dismiss attacks the allegations of the complaint on the issue of
jurisdiction, the court is not confined to the allegations of the complaint but may
resort to affidavits or other evidence to determine jurisdiction." Coggeshall v.
Reprod. Endocrine Assocs. of Charlotte, 376 S.C. 12, 16, 655 S.E.2d 476, 478
(2007).
This court reviews a circuit court's determination regarding a waiver of a personal
jurisdiction defense under an abuse of discretion standard. Maybank, 416 S.C. at
566, 787 S.E.2d at 511. "An abuse of discretion occurs when there is an error of
law or a factual conclusion that is without evidentiary support." Ellis v. Davidson,
358 S.C. 509, 524, 595 S.E.2d 817, 825 (Ct. App. 2004).
LAW/ANALYSIS
I. Exercise of Personal Jurisdiction
Abdulla argues the circuit court erred in determining it could not exercise personal
jurisdiction over Southern Bank. We disagree.
South Carolina's long-arm statute provides that "[a] court may exercise personal
jurisdiction over a person who acts directly or by an agent as to a cause of action
arising from the person's . . . commission of a tortious act in whole or in part in this
State . . . ." § 36-2-803(A)(3).
"The Due Process Clause of the Fourteenth Amendment limits the power of a state
court to exert personal jurisdiction over a nonresident defendant." Moosally, 358
S.C. at 330, 594 S.E.2d at 883. "Due process requires that there exist minimum
contacts between the defendant and the forum state such that maintenance of the
suit does not offend traditional notions of fair play and substantial justice." Id.
"Traditionally, our courts have conducted a two-step analysis to determine whether
specific jurisdiction is proper by 1) determining if the long[-]arm statute applies
and 2) determining whether the nonresident's contacts in South Carolina are
sufficient to satisfy due process requirements." Cribb v. Spatholt, 382 S.C. 475,
483, 676 S.E.2d 706, 710 (Ct. App. 2009). "However, a more recent trend
compresses the analysis into a due process assessment only." Id.17
"Courts have construed South Carolina's long-arm statute, which affords broad
power to exercise personal jurisdiction over causes of action arising from tortious
acts and injuries in South Carolina, to extend to the outer limits of the [D]ue
[P]rocess [C]lause." Hidria, USA, Inc., 415 S.C. at 540, 783 S.E.2d at 843.
"Because we treat our long-arm statute as coextensive with the [D]ue [P]rocess
[C]lause, the sole question becomes whether the exercise of personal jurisdiction in
this case would violate the strictures of due process." Moosally, 358 S.C. at 329,
594 S.E.2d at 883.
"Due process requires a defendant possess minimum contacts with the forum state
such that maintenance of suit does not offend traditional notions of fair play and
substantial justice." Cribb, 382 S.C. at 483, 676 S.E.2d at 711. "Courts apply a
two-pronged analysis when determining whether a defendant possesses minimum
contacts with the forum state such that maintenance of suit does not offend
traditional notions of fair play and substantial justice." Id. at 484, 676 S.E.2d at
711. "The court must (1) find that the defendant has the requisite minimum
contacts with the forum, without which, the court does not have the 'power' to
adjudicate the action and (2) find the exercise of jurisdiction is reasonable or fair."
Power Prod. & Servs. Co., Inc. v. Kozma, 379 S.C. 423, 432, 665 S.E.2d 660, 665
(Ct. App. 2008). "To satisfy the power prong, the court must find the defendant
directed his activities to residents of South Carolina and that the cause of action
arises out of or relates to those activities." Cribb, 382 S.C. at 499, 676 S.E.2d at
719. "The defendant must purposefully avail itself of the privileges of conducting
activities in this State, thus invoking the benefits and protections of our laws." S.
Plastics Co. v. S. Com. Bank, 310 S.C. 256, 261, 423 S.E.2d 128, 131 (1992).
"The 'purposeful availment' requirement ensures that a defendant will not be haled
into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts."
Moosally, 358 S.C. at 332, 594 S.E.2d at 884. In evaluating the fairness prong, a
court considers the following factors: "(1) the duration of the defendant's activity in
this State; (2) the character and circumstances of its acts; (3) the inconvenience to
the parties by conferring or refusing to confer jurisdiction over the nonresident;
and (4) the State's interest in exercising jurisdiction." Cribb, 382 S.C. at 484, 676
S.E.2d at 711.
"The plaintiff bears the burden of satisfying both tests." Hidria, USA, Inc., 415
S.C. at 541, 783 S.E.2d at 843. "If either prong fails, the exercise of personal
jurisdiction over the defendant fails to comport with the requirements of due
process." S. Plastics Co., 310 S.C. at 260, 423 S.E.2d at 131.
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Initially, Abdulla only raises arguments regarding whether the long-arm statute
applies and does not address whether Southern Bank sustained minimum contacts
in South Carolina so as to satisfy due process. However, because our courts treat
the long-arm statute as coextensive with the Due Process Clause, we address
whether Abdulla showed the exercise of personal jurisdiction over Southern Bank
would not violate due process. See Moosally, 358 S.C. at 329, 594 S.E.2d at 883
("Because we treat our long-arm statute as coextensive with the [D]ue [P]rocess
[C]lause, the sole question becomes whether the exercise of personal jurisdiction in
this case would violate the strictures of due process."); Cribb, 382 S.C. at 483, 676
S.E.2d at 711 ("Due process requires a defendant possess minimum contacts with
the forum state such that maintenance of suit does not offend traditional notions of
fair play and substantial justice."); Hidria, USA, Inc., 415 S.C. at 541, 783 S.E.2d
at 843 ("The plaintiff bears the burden of satisfying both tests."). We find he did
not.
We hold the circuit court did not err in finding it could not exercise personal
jurisdiction over Southern Bank under the long-arm statute and Abdulla failed to
demonstrate how subjecting Southern Bank to the jurisdiction of the court would
not offend due process. We conclude the power prong of the due process
consideration is not satisfied by the facts of this case. See Hidria, USA, Inc., 415
S.C. at 539, 783 S.E.2d at 842 ("The question of whether a court may exercise
personal jurisdiction over a nonresident defendant is one that must be resolved
upon the facts of each particular case."). First, we find Southern Bank's contacts to
South Carolina were nonexistent in this matter. See Power Prod. & Servs Co., 379
S.C. at 432, 665 S.E.2d at 665 (determining the court must first "find that the
defendant has the requisite minimum contacts with the forum, without which, the
court does not have the 'power' to adjudicate the action"). Southern Bank's
relationship with Abdulla was limited to Georgia. The transactions he conducted
with Southern Bank all occurred in Georgia. Southern Bank did not have any
locations in South Carolina. Southern Bank did not directly conduct business with
Abdulla after he moved to South Carolina in 2010. At all times during its
existence, Sportsman's was a Georgia corporation with its physical location in
Augusta, Georgia.
Second, we find Abdulla failed to show Southern Bank directed its activities or
purposefully availed itself of the privileges of conducting business in South
Carolina and thus invoked the benefits and protections of South Carolina's laws
such that it could anticipate being "haled" into court here. See Cribb, 382 S.C. at
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484, 676 S.E.2d at 711 ("To satisfy the power prong, the court must find the
defendant directed his activities to residents of South Carolina and that the cause of
action arises out of or relates to those activities."); S. Plastics Co., 310 S.C. at 261,
423 S.E.2d at 131 ("The defendant must purposefully avail itself of the privileges
of conducting activities in this State, thus invoking the benefits and protections of
our laws."); Moosally, 358 S.C. at 332, 594 S.E.2d at 884 ("The 'purposeful
availment' requirement ensures that a defendant will not be haled into a jurisdiction
solely as a result of random, fortuitous, or attenuated contacts.").
We conclude Abdulla failed to show (1) Southern Bank established sufficient
contacts with this forum such that it should have anticipated being sued here and
(2) the exercise of personal jurisdiction over Southern Bank under the long-arm
statute comported with the "traditional notions of fair play and substantial justice."
See Cribb, 382 S.C. at 483, 676 S.E.2d at 711; see also Hidria, USA, Inc., 415 S.C.
at 541, 783 S.E.2d at 843 ("The plaintiff bears the burden of satisfying both
tests.").
Because Abdulla failed to establish Southern Bank possessed the requisite
minimum contacts with South Carolina so as to not offend due process, we do not
address the fairness prong of the due process consideration. See Power Prod. &
Servs. Co., 379 S.C at 432, 665 S.E.2d at 665 (determining that the court must
"find the exercise of jurisdiction is reasonable or fair"); Hidria, USA, Inc., 415 S.C.
at 541, 783 S.E.2d at 843 ("The plaintiff bears the burden of satisfying both tests.")
(emphasis added); S. Plastics Co., 310 S.C. at 260, 423 S.E.2d at 131 ("If either
prong fails, the exercise of personal jurisdiction over the defendant fails to comport
with the requirements of due process."); Futch v. McAllister Towing of
Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999) (observing an
appellate court need not address remaining issues when the determination of
another point is dispositive). Accordingly, we affirm on this issue.
II. Waiver of Defense under Maybank
Abdulla argues Southern Bank waived its defense based on lack of personal
jurisdiction because it engaged in discovery and delayed in seeking a dismissal.
We disagree.
"[A] delay in challenging personal jurisdiction by motion to dismiss may result in
waiver, even where the defense was asserted in a timely answer." Maybank, 416
20
S.C. at 565, 787 S.E.2d at 510 (quoting Hamilton v. Atlas Turner, Inc., 197 F.3d
58, 60 (2d Cir. 1999)).
In Maybank, our supreme court determined a trial court acted within its discretion
when it found an appellant, a banking corporation, waived its personal jurisdiction
defense. 416 S.C. at 566, 787 S.E.2d at 511. In its answer, the corporation
reserved its objection to the exercise of personal jurisdiction and subsequently
moved for removal to federal court, without allowing the trial court to rule on its
defense reservation. Id. There, the parties engaged in litigation and discovery,
prior to and after remand to the state court, for more than one year, and "[a]fter its
active participation in the extensive discovery leading up to trial," the banking
corporation reasserted its reservation "a mere one month prior to the start of trial."
Id. On appeal, the banking corporation argued it was a North Carolina corporation
with no operations, offices, or employees in South Carolina and had never
provided services to the individual respondent or any individual customer in South
Carolina. Id. at 564, 787 S.E.2d at 510. Our supreme court determined the defense
was waived and the corporation "gambled that it could argue personal jurisdiction
on the eve of trial after actively participating in litigation over the course of two
and a half years." Id. at 566, 787 S.E.2d at 511.
We find the circuit court did not err in determining Southern Bank did not waive
its defense. See Ellis, 358 S.C. at 524, 595 S.E.2d at 825 ("An abuse of discretion
occurs when there is an error of law or a factual conclusion that is without
evidentiary support."). Here, unlike in Maybank, when that appellant waited more
than one year after remand back to the state court to reassert the personal
jurisdiction defense it simply "reserved" in its answer, Southern Bank stated in its
answer the facts and allegations pertinent to its lack of personal jurisdiction
defense and timely brought the issue before the circuit court by filing a motion to
dismiss after raising the defense. Furthermore, we find Southern Bank did not
waive its defense (1) by answering Abdulla's interrogatories and requests for
production because it responded at Abdulla's counsel's behest, who requested the
responsive discovery from Southern Bank to "expedite the disposition of the case"
or (2) by participating in depositions to determine the issue of personal jurisdiction.
See Erickson v. Jones St. Publishers, LLC, 368 S.C. 444, 476, 629 S.E.2d 653, 670
(2006) ("[A] party may not complain on appeal of error . . . which his own conduct
has induced."). Additionally, the parties agreed to a consent motion for entry of a
scheduling order, which stated Southern Bank's motion to dismiss would need to
21
be heard before trial, and agreed the scheduling order was necessary for the parties
to proceed with the motion. Accordingly, we affirm this issue.
CONCLUSION
Based on the foregoing, the circuit court's order dismissing Abdulla's claims for
lack of personal jurisdiction is
AFFIRMED. 5
WILLIAMS, C.J., and THOMAS, J., concur.
5
We decide this case without oral argument pursuant to Rule 215, SCACR.
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