## Facts

- Texas investors Robert H. Young and EDX Holdings, Inc. deposited over $500,000 into a South Carolina bank as part of an investment arrangement that later collapsed and the funds were not accounted for.
- Plaintiffs alleged they relied on an unqualified audit letter concerning SAFIG’s financial statements.
- The audit letter was prepared and issued in the Bahamas by Price Waterhouse, Chartered Accountants (PW–Bahamas) and was printed on Price Waterhouse letterhead, signed “Price Waterhouse.”
- Plaintiffs sued PW–Bahamas and Price Waterhouse–United States (PW–US), a New York partnership with certain partners residing in South Carolina, seeking to treat the firms as one partnership or apparent partnership for liability purposes.
- To support a “single worldwide firm” theory, plaintiffs cited Price Waterhouse marketing materials describing a global organization with hundreds of offices.
- The brochure evidence was obtained by plaintiffs’ counsel at a seminar, and plaintiffs did not show they saw or relied on it when deciding to invest.

## Issues

1. Whether South Carolina courts could exercise personal jurisdiction over PW–Bahamas based on minimum contacts and purposeful availment.
2. Whether plaintiffs stated a claim against PW–US (or its South Carolina partners) under a partnership or partnership-by-estoppel theory for PW–Bahamas’s alleged negligence.
3. Whether partnership by estoppel could apply without allegations or evidence that plaintiffs actually relied on a representation that PW–US and PW–Bahamas were partners.

## Decision

- The court dismissed PW–Bahamas for lack of personal jurisdiction under Rule 12(b)(2) because its forum contacts were insufficient to satisfy due process.
- The court dismissed the claims against the South Carolina partners of PW–US under Rule 12(b)(6) for failure to state a claim.
- The court concluded that plaintiffs did not plead or show the reliance required to impose liability through partnership by estoppel.
- The court found no alleged participation by the South Carolina partners in the audit work, the investment transaction, or any misrepresentation to plaintiffs.

## Legal Principles

- Personal jurisdiction requires constitutionally sufficient minimum contacts showing purposeful availment; foreseeability that a product or statement may reach the forum, without forum-directed conduct, is insufficient.
- A foreign defendant’s isolated act of preparing an audit letter abroad, later used in a forum-state transaction, does not by itself establish purposeful availment.
- Partnership by estoppel requires (1) a representation that a partnership exists (or that a party is a partner) and (2) the third party’s extension of credit or change of position on the faith of that representation.
- Common branding, shared letterhead, or marketing describing a global network does not create partnership-by-estoppel liability absent proof that the plaintiff actually relied on the representation in entering the transaction.
- Partners are not liable for another entity’s alleged wrongdoing without a viable partnership/apparent partnership basis or allegations tying the partners to the wrongful conduct.

## Conclusion

The court refused to exercise jurisdiction over the Bahamian accounting partnership because it did not purposefully direct relevant conduct toward South Carolina, and it rejected attempts to impose liability on U.S. partners through partnership by estoppel where the investors did not rely on any representation of a single worldwide partnership when making the investment.


Young v. Jones, 816 F. Supp. 1070 (D.S.C. 1992)