When Assets and Liabilities Transfer, So Does Jurisdiction: The Second Circuit’s Landmark Successor-Jurisdiction Doctrine in Lelchook v. Société Générale de Banque au Liban S.A.L. (2025)

When Assets and Liabilities Transfer, So Does Jurisdiction: The Second Circuit’s Landmark Successor-Jurisdiction Doctrine in Lelchook v. Société Générale de Banque au Liban S.A.L. (2025)

Introduction

The United States Court of Appeals for the Second Circuit, in Lelchook v. Société Générale de Banque au Liban S.A.L. (“Lelchook IV”), charted new territory in U.S. personal-jurisdiction doctrine. Twenty-one U.S. citizens injured during Hezbollah rocket attacks in Israel, along with estates and family members, sued Société Générale de Banque au Liban S.A.L. (“SGBL”), a Lebanese bank, under the Anti-Terrorism Act (ATA) and Justice Against Sponsors of Terrorism Act (JASTA). SGBL had purchased “all” assets and liabilities of Lebanese Canadian Bank (“LCB”) in 2011—yet the deal was not a statutory merger under New York law. The district court dismissed for lack of personal jurisdiction, but the Second Circuit reversed, holding that:

“Where an entity acquires all of another entity’s assets and liabilities, it inherits the acquired entity’s status for purposes of specific personal jurisdiction—even if there is no formal merger.”

This rule, confirmed first by a 2024 New York Court of Appeals answer to a certified question and then applied by the Second Circuit, creates a powerful precedent: successor jurisdiction follows the liabilities when the purchase is total. Below is an in-depth commentary on the decision’s reasoning, precedential scaffolding, and likely ripple effects.

Summary of the Judgment

  • The Second Circuit reversed the Eastern District of New York’s dismissal and remanded for merits proceedings.
  • Under New York’s long-arm statute (CPLR 302(a)(1)), SGBL is subject to specific personal jurisdiction because it acquired LCB’s New-York-based liabilities wholesale.
  • The exercise of jurisdiction comports with federal due-process requirements: SGBL purposefully availed itself of New York benefits, could reasonably foresee being haled into New York court, and litigation there does not offend “traditional notions of fair play and substantial justice.”
  • Key factual hooks:
    • LCB repeatedly used a New-York correspondent account to move U.S.-dollar funds allegedly benefitting Hezbollah.
    • SGBL’s 2011 purchase agreement covered “any and all” liabilities—“absolute or contingent.”
    • LCB is now practically judgment-proof; allowing SGBL to escape would thwart victim compensation and encourage corporate gamesmanship.

Analytical Commentary

A. Precedents Cited and Their Influence

  1. Licci Trilogy (Licci II–IV) & New York Court of Appeals (Licci III)
    • Established that deliberate and repeated use of a New-York correspondent banking account to funnel dollars abroad constitutes “transacting business” under CPLR 302(a)(1).
    • Held that such use satisfies federal due-process minimum contacts.
    • Lelchook borrows these holdings to attribute LCB’s contacts to SGBL once successor status is accepted.
  2. Kaplan v. Lebanese Canadian Bank (2021)
    • Confirmed plausibility of ATA/JASTA aiding-and-abetting claims against LCB for the same 2006 Hezbollah attacks.
    • Demonstrated substantive viability of plaintiffs’ theory if jurisdiction could be established.
  3. Fourth-Circuit & State Cases on Successor Jurisdiction (Madison Management, Jeffrey v. Rapid American, etc.)
    • Cited for the predominant national rule: when forum law imposes successor liability, courts may impute predecessor contacts for jurisdiction.
    • New York Court of Appeals noted this “great weight of authority,” aligning New York with the majority view.

B. The Court’s Legal Reasoning

  1. State-Law Step (Rule 4(k)(1)(A))
    • Because personal jurisdiction hinged on the New York long-arm statute, the panel certified whether jurisdictional status transfers without a statutory merger.
    • The New York Court of Appeals answered “yes,” emphasising commercial expectations, risk internalisation, and victim compensation.
    • SGBL therefore inherits LCB’s New-York contacts.
  2. Due-Process Step
    • Purposeful availment: SGBL deliberately acquired assets created through New-York banking; acquisition was a “deliberate undertaking” akin to extending its own hand into the forum.
    • Reasonable foreseeability: In 2011 SGBL knew or should have known LCB was embroiled in ATA litigation and designated a “primary money-laundering concern.”
    • Relatedness: Plaintiffs’ injuries arise from the same correspondent-account transactions constituting the forum contacts.
    • Fair play & substantial justice: Modern travel and communication ease the burden; New York’s interest in policing its banking system is strong; plaintiffs have no realistic alternative if LCB is insolvent.

C. Potential Impact

  • Corporate Transactions: Asset purchasers must now treat jurisdictional risk the same way they treat substantive liabilities. Comprehensive due diligence on where liabilities arose becomes non-negotiable.
  • Banking & Anti-Terrorism Litigation: Foreign banks that inherit correspondent-account liabilities cannot use corporate structuring to dodge U.S. courts. Expect more ATA/JASTA suits aimed at successors.
  • M&A Drafting Practices: “All assets and liabilities” clauses will trigger jurisdictional inheritance in New York; lawyers may carve out U.S. liabilities or adjust price accordingly.
  • Forum-Shopping Dynamics: Victims of international wrongdoing may look to New York not only for deep financial markets but also for an expanded successor-jurisdiction doctrine.
  • State Long-Arm Uniformity: Other states may follow New York’s lead, citing the decision’s national survey and policy rationale.

Complex Concepts Simplified

  • Specific vs. General Jurisdiction: Specific jurisdiction applies only to claims arising from a defendant’s forum activities; general jurisdiction lets any claim be brought where the defendant is “at home” (state of incorporation or principal place of business).
  • Successor Liability: When one company buys another’s business, law sometimes treats it as stepping into the seller’s shoes for debts and lawsuits.
  • Successor Jurisdiction: The mirror concept in procedural law—if substantive liability transfers, so do minimum contacts for jurisdiction.
  • Correspondent Banking: An account a foreign bank keeps with a U.S. bank to clear dollar-denominated transactions. Using it repeatedly is treated as “doing business” in New York.
  • ATA & JASTA: Federal statutes allowing U.S. nationals to sue for injuries “by reason of” international terrorism; JASTA (2016) added aiding-and-abetting liability.
  • Certified Question: A federal court asks a state’s highest court to resolve a novel state-law issue; the answer binds the federal court.

Conclusion

Lelchook v. SGBL cements a pragmatic principle: “He who takes the entire business takes the courtroom seat.” Asset purchasers—especially in regulated sectors like banking—must expect to litigate where their predecessors could have. For victims of terrorism and other transnational torts, the decision preserves an effective path to compensation and deters corporate shell games designed to evade liability. Doctrinally, the ruling harmonises New York with the national mainstream and links substantive successor liability to procedural successor jurisdiction, all while respecting due-process boundaries. The stage is now set for the district court to address the merits of the plaintiffs’ ATA and JASTA claims—and for deal lawyers worldwide to redraft acquisition agreements with an eye toward the New York courthouse.

Case Details

Year: 2025
Court: Court of Appeals for the Second Circuit

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