New York Law Review

Tag: minimum contacts

  • LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210 (2000): Establishes Long-Arm Jurisdiction Over a Non-Domiciliary Tortfeasor

    LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210 (2000)

    A court may exercise personal jurisdiction over a non-domiciliary defendant who commits a tortious act outside the state causing injury within the state, if the defendant expects the act to have consequences within the state and derives substantial revenue from interstate or international commerce.

    Summary

    LaMarca, a New York resident, sued Pak-Mor, a Texas corporation, for injuries sustained while using a sanitation truck equipped with Pak-Mor’s allegedly defective loading device. The New York Court of Appeals held that New York’s long-arm statute conferred jurisdiction over Pak-Mor and that exercising such jurisdiction comported with due process. Pak-Mor’s sale of the device to a New York distributor, knowledge that the device was destined for New York, and substantial revenue from interstate commerce established sufficient minimum contacts to justify jurisdiction in New York. The court reasoned that requiring Pak-Mor to defend the suit in New York was fair, given its purposeful availment of the New York market.

    Facts

    Pak-Mor, a Texas corporation, manufactures garbage hauling equipment and has a manufacturing facility in Virginia. Pak-Mor sold an allegedly faulty rear-loading device to its New York distributor, Truckmobile Equipment Corp., who then sold it to the Town of Niagara, New York. Pak-Mor’s invoice indicated the device was destined for Niagara, New York and included a “New York Light Bar.” LaMarca was injured in Niagara, New York, while using the rear-loader.

    Procedural History

    LaMarca sued Pak-Mor in New York State Supreme Court. Pak-Mor moved to dismiss for lack of personal jurisdiction. The Supreme Court granted the motion, and the Appellate Division affirmed. The New York Court of Appeals granted leave to appeal after related claims were resolved.

    Issue(s)

    Whether New York’s long-arm statute, CPLR 302(a)(3)(ii), confers personal jurisdiction over Pak-Mor, a non-domiciliary defendant, based on a tortious act committed outside the state causing injury within the state.

    Whether the exercise of personal jurisdiction over Pak-Mor comports with the Due Process Clause of the Fourteenth Amendment.

    Holding

    1. Yes, because Pak-Mor committed a tortious act outside New York that caused injury within the state, expected its actions to have consequences in New York, and derived substantial revenue from interstate commerce.

    2. Yes, because Pak-Mor had sufficient minimum contacts with New York, and exercising jurisdiction over Pak-Mor in New York would not offend traditional notions of fair play and substantial justice.

    Court’s Reasoning

    The Court of Appeals analyzed the five elements required for jurisdiction under CPLR 302(a)(3)(ii): (1) a tortious act outside the state, (2) the cause of action arising from that act, (3) injury within the state, (4) expectation of consequences within the state, and (5) substantial revenue from interstate commerce. The court found that Pak-Mor’s invoice, including the “New York Light Bar,” demonstrated its knowledge that the rear-loader was destined for New York. The court also emphasized that Pak-Mor’s business was not local, as it was a Texas corporation with a facility in Virginia, a New York distributor, and national advertising.

    Regarding due process, the court applied the “minimum contacts” test from International Shoe Co. v. Washington, stating that the defendant’s conduct and connection with the forum state must be such that they “should reasonably anticipate being haled into court there” (World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297). The Court distinguished this case from World-Wide Volkswagen, noting that Pak-Mor purposefully directed its product to New York, unlike the fortuitous circumstance of a car accident in Oklahoma. The court determined that Pak-Mor “purposefully avail[ed] itself of the privilege of conducting activities within the forum State.”

    The court also considered whether exercising jurisdiction would comport with “fair play and substantial justice.” It balanced the burden on the defendant, the interests of the forum state, the plaintiff’s interest in obtaining relief, the interstate judicial system’s interest in efficient resolution, and the shared interests of the states in furthering fundamental substantive social policies, citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113. The court found that the burden on Pak-Mor was not great, as it was a U.S. corporation familiar with the legal system, and New York had an interest in providing a forum for its injured resident. The court concluded, “When a company of Pak-Mor’s size and scope profits from sales to New Yorkers, it is not at all unfair to render it judicially answerable for its actions in this State.”

  • Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 62 N.Y.2d 65 (1984): Quasi-in-Rem Jurisdiction and Minimum Contacts

    Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 62 N.Y.2d 65 (1984)

    Quasi-in-rem jurisdiction over a non-domiciliary defendant is permissible in New York when the defendant has minimum contacts with the state, and the cause of action is related to property located within the state, even if CPLR 302 does not authorize in personam jurisdiction.

    Summary

    Banco Ambrosiano, an Italian bank, sued Artoc Bank, a Bahamian bank, in New York to recover $15 million allegedly loaned to Artoc. Ambrosiano attached Artoc’s New York bank account. The New York Court of Appeals held that quasi-in-rem jurisdiction was proper because Artoc had sufficient minimum contacts with New York through its regular use of a New York bank account to effectuate international transactions, and because the lawsuit arose directly from transactions involving that account. The court emphasized that while CPLR 302 may not always provide for in personam jurisdiction to the full extent permitted by due process, quasi-in-rem jurisdiction could fill this gap when minimum contacts are present.

    Facts

    Banco Ambrosiano (Ambrosiano), an Italian bank, loaned $15 million to Artoc Bank & Trust Limited (Artoc), a Bahamian bank. The loan consisted of three $5 million transactions. Artoc directed Ambrosiano to deposit the funds into Artoc’s account at Brown Brothers Harriman in New York. Repayment, according to Artoc’s documentation, was to be made to Ambrosiano’s account at its New York correspondent bank. Artoc argued the loans were intended for Ambrosiano’s Peruvian subsidiary, and repayment was contingent on the subsidiary’s repayment to Artoc. Artoc’s only contact with New York was its maintenance of the correspondent bank account at Brown Brothers.

    Procedural History

    Ambrosiano commenced the action by obtaining an ex parte order restraining Brown Brothers from transferring funds in Artoc’s account. Ambrosiano moved to confirm the attachment; Artoc challenged the jurisdiction. Special Term granted Ambrosiano’s motion, finding a reasonable relationship between the property and the cause of action, sufficient for quasi-in-rem jurisdiction. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the exercise of quasi-in-rem jurisdiction over Artoc’s New York bank account is consistent with due process, given that Artoc’s sole contact with New York is the maintenance of this account and the loan transactions involved deposits into and repayments to accounts within the state.

    Holding

    Yes, because Artoc’s New York bank account was closely related to Ambrosiano’s claim, Artoc regularly used the account for international banking, and Artoc directed funds to be deposited into and repaid to New York accounts, thus establishing sufficient minimum contacts with New York to satisfy due process for quasi-in-rem jurisdiction.

    Court’s Reasoning

    The Court of Appeals analyzed the impact of Shaffer v. Heitner, which extended the minimum contacts analysis of International Shoe to quasi-in-rem jurisdiction. The court acknowledged that Shaffer limited the use of quasi-in-rem jurisdiction. However, it emphasized that a “gap” exists in New York law because CPLR 302 doesn’t extend in personam jurisdiction to the constitutional limit. The court stated that in such cases, quasi-in-rem jurisdiction is appropriate. The court found that Artoc’s contact with New York was not merely the presence of property. “This is not a case in which property is coincidentally located within the State’s borders and forms the only relevant link to defendant; rather, Artoc’s account with Brown Brothers is closely related to plaintiff’s claim.” The court also pointed out Artoc’s regular use of the account for international banking and the fact that Artoc directed funds to be deposited and repaid through New York accounts. These factors, taken together, establish sufficient minimum contacts to satisfy due process. The court further held that the lower courts did not abuse their discretion in refusing to dismiss the action on the grounds of forum non conveniens and that Ambrosiano, as a foreign banking corporation, could maintain the action under Banking Law § 200-b (subd 2, par [a]).

  • Carr v. Carr, 46 N.Y.2d 270 (1978): Establishes Jurisdictional Limits in Matrimonial Actions Against Non-Residents

    Carr v. Carr, 46 N.Y.2d 270 (1978)

    A state court lacks jurisdiction over a non-resident defendant in a matrimonial action when the defendant has no minimum contacts with the state, even if the plaintiff is a state resident seeking a declaration regarding marital status.

    Summary

    Ann Carr, a New York resident, sued Barbara Carr, a California resident, seeking a declaration that Ann was the lawful surviving spouse of Paul Carr and that Paul’s Honduran divorce from Ann was invalid. Barbara had married Paul after the divorce and was seeking survivor benefits. The New York Court of Appeals held that New York lacked jurisdiction over Barbara because she had no minimum contacts with New York. The court reasoned that while status adjudications like divorce can sometimes proceed with only one party domiciled in the state, this requires either in rem or in personam jurisdiction, neither of which existed here regarding Barbara. The marital “res” cannot provide a jurisdictional basis after the death of one spouse to bind a third party without in personam jurisdiction.

    Facts

    Ann Carr married Paul Carr in Nevada in 1956 and lived with him in various countries due to his Foreign Service work.
    In 1965, Ann left Paul in Honduras and returned to the United States, eventually settling in New York.
    Paul obtained an ex parte Honduran divorce from Ann based on abandonment.
    Barbara Carr had resided in California since 1962 and claimed to have married Paul in Nevada in 1974.
    Barbara had no contacts with New York State.
    After Paul’s death in 1975, Barbara applied for survivor benefits from the Foreign Service Retirement and Disability System.

    Procedural History

    Ann Carr commenced an action in New York to invalidate the Honduran divorce and declare herself the lawful surviving spouse.
    Special Term granted Barbara Carr’s motion to dismiss for lack of jurisdiction.
    The Appellate Division reversed, but the Court of Appeals reversed the Appellate Division and dismissed the action.

    Issue(s)

    Whether a New York court has jurisdiction over a non-resident defendant (Barbara Carr) in a declaratory judgment action brought by a New York resident (Ann Carr) to determine the validity of a prior divorce and marital status, when the non-resident defendant has no minimum contacts with New York.

    Holding

    No, because the non-resident defendant had no minimum contacts with New York, and the marital “res” does not provide a basis for jurisdiction after the death of one spouse to bind a third party without in personam jurisdiction.

    Court’s Reasoning

    The Court of Appeals stated that divorce jurisdiction requires at least one party to be domiciled in the state. While domicile can support in rem jurisdiction over marital status, this is insufficient when the defendant has no contacts with the state and the action seeks to bind a non-domiciliary third party after the death of one spouse.
    The court emphasized the absence of minimum contacts between Barbara Carr and New York, citing International Shoe Co. v. Washington and Kulko v. California Superior Ct., noting that Barbara had not purposefully derived any benefits from activities related to New York.
    The court rejected the argument that New York’s interest in adjudicating the marital rights of its domiciliary (Ann Carr) was sufficient to establish jurisdiction over Barbara.
    The court distinguished traditional status suits, which seek to terminate or declare void an existing marriage, from the present case, where the very existence of the marital res (i.e., the validity of Paul’s divorce and subsequent marriage to Barbara) was the question to be resolved. The court declined to decide whether such declaratory judgment actions could ever be maintained without personal jurisdiction, as the lack of minimum contacts was dispositive.
    The court stated, “Plainly, the absence of any contact between defendant and New York is an obstacle to the exercise of personal jurisdiction. If defendant had even a minimal relationship with the State, there is little doubt that jurisdiction in this declaratory judgment action could be sustained”.

  • Rosenblatt v. American Cyanamid Co., 16 N.Y.2d 24 (1965): Establishing Jurisdiction Over Non-Resident Executors

    16 N.Y.2d 24 (1965)

    A state court can exercise personal jurisdiction over a non-domiciliary’s executor or administrator for causes of action arising from acts the non-domiciliary committed within the state, provided the exercise of jurisdiction comports with due process.

    Summary

    This case addresses whether New York courts can constitutionally exercise personal jurisdiction over non-resident executors of a deceased defendant who was properly served while alive. The suit was brought by stockholders against corporate directors for alleged breaches of fiduciary duty. One director, Burg, was served in Massachusetts but later died. The plaintiffs sought to substitute Burg’s executors, who resided in Massachusetts. The executors challenged the court’s jurisdiction. The New York Court of Appeals held that exercising jurisdiction over the non-resident executors was constitutional, as the original action was properly commenced against Burg based on his business activities in New York, and the state has a legitimate interest in providing a forum for resolving disputes arising from those activities.

    Facts

    Plaintiffs, stockholders of Hotel Corporation of America, sued 19 individual defendants, including A.S. Burg, for allegedly realizing personal profits through real estate transactions with the corporation, constituting a breach of fiduciary duties.
    Burg, a director, was personally served in Massachusetts under CPLR 302(a)(1) based on his transaction of business in New York.
    Burg voluntarily appeared by filing an answer.
    Burg died, and executors were appointed in Massachusetts.
    Plaintiffs moved to substitute Burg’s non-resident executors as defendants.

    Procedural History

    The other defendants moved for a stay pending the posting of security by the plaintiffs, which was granted. After the stay was lifted, plaintiffs moved for substitution of Burg’s executors. Special Term ordered the substitution. The Appellate Division unanimously affirmed. The case reached the New York Court of Appeals by certified question regarding the constitutionality of jurisdiction over the non-resident executors.

    Issue(s)

    1. Whether New York courts can constitutionally obtain in personam jurisdiction over non-resident executors who have committed no acts or transacted no business in the state, where the deceased defendant was properly served before death based on in-state business activity.
    2. Whether the plaintiffs’ application for substitution was made within a reasonable time after the decedent’s death, as required by CPLR 1015(a) and 1021.

    Holding

    1. Yes, because the deceased defendant was properly served while alive due to transacting business in New York, and the state’s long-arm statute permits jurisdiction over the executor in such circumstances, consistent with due process.
    2. Yes, because the delay was not unreasonable given a stay of proceedings was in effect for a significant portion of the time following the defendant’s death, and the decision to allow substitution was within the court’s discretion.

    Court’s Reasoning

    The Court addressed the constitutionality of CPLR 302 and 313, which authorize personal jurisdiction over a non-domiciliary’s executor or administrator when the cause of action arises from acts within the state. The court noted a shift in jurisdictional concepts since International Shoe Co. v. Washington, which established that due process requires only that a defendant have minimum contacts with the forum state such that maintaining the suit does not offend traditional notions of fair play and substantial justice.
    The court distinguished prior New York cases that questioned the constitutionality of obtaining jurisdiction over foreign executors, emphasizing that CPLR 302 and 313 are narrowly tailored to apply only to causes of action having minimum contacts with New York.
    The court cited McGee v. International Life Ins. Co., noting the trend toward expanding the permissible scope of state jurisdiction over non-residents based on a substantial connection with the state. The Court also referenced United States v. Montreal Trust Co., where the Second Circuit upheld the constitutionality of CPLR 302, finding that the defendant had transacted sufficient business in New York to justify service of process upon his estate.
    The court emphasized that the statutes provide procedural safeguards required for due process of law and are applicable only to causes of action having certain minimum contacts with the state, similar to the reasoning used to uphold non-resident motorist statutes in Leighton v. Roper. The court implicitly adopts the view that the state has an interest in providing a forum for claims arising from activities within its borders, even after the death of the non-resident defendant.
    The court found no abuse of discretion in allowing the substitution despite the delay, given the stay of proceedings. The court considered the objection that a judgment might not be enforceable in Massachusetts as speculative and premature, citing Leighton v. Roper.

  • Feathers v. McLucas, 15 N.Y.2d 443 (1965): Jurisdiction Based on Tortious Act Within the State

    15 N.Y.2d 443 (1965)

    A state’s long-arm statute, requiring that a tortious act be committed within the state for the assertion of personal jurisdiction over a non-domiciliary, is not satisfied by the mere occurrence of injury within the state resulting from an out-of-state tortious act.

    Summary

    The New York Court of Appeals addressed the scope of New York’s long-arm statute, CPLR 302, in three consolidated cases. Specifically, the court interpreted whether jurisdiction could be asserted over non-domiciliary corporations based on either transacting business within the state or committing a tortious act within the state. In Feathers v. McLucas, the court held that the statute requires the tortious act itself to occur within New York, not merely the resulting injury. The court rejected the argument that injury within the state, resulting from a negligent act elsewhere, was sufficient to establish jurisdiction under the statute. This decision clarified the limits of New York’s long-arm jurisdiction in cases involving out-of-state manufacturers.

    Facts

    Mr. and Mrs. Feathers sought damages for personal injuries and property damage caused by an explosion of a tractor-drawn steel tank carrying flammable gas on a New York highway near their home. The tank was manufactured in Kansas by The Darby Products of Steel Plate Corporation under contract with Butler Manufacturing Co. Darby allegedly knew that Butler would mount the tank on a wheelbase and sell it to E. Brooke Matlack, an interstate carrier operating in multiple states, including New York. The Feathers sued Darby, alleging negligence and breach of warranty in the tank’s manufacture.

    Procedural History

    Darby was served in Kansas. Darby moved to dismiss the complaint for lack of personal jurisdiction, asserting it had no business or presence in New York. Special Term granted the motion. The Appellate Division, Third Department, reversed, holding that the long-arm statute applied because the injury occurred in New York. The Appellate Division granted leave to appeal to the New York Court of Appeals.

    Issue(s)

    Whether, under CPLR 302(a)(2), a non-domiciliary commits a tortious act within New York when the act of negligence occurs outside the state, but the injury occurs within New York.

    Holding

    No, because CPLR 302(a)(2) requires that the tortious act itself, not merely the injury, occur within New York.

    Court’s Reasoning

    The court emphasized that the language of CPLR 302(a)(2) explicitly requires the defendant to commit a tortious act “within the state.” The court reasoned that the mere occurrence of injury in New York is insufficient to transform an out-of-state tortious act into one committed within the state. The court noted that the legislative history supported this interpretation, indicating that the statute was intended to confer jurisdiction only when the defendant’s act occurred within the state. The court rejected the argument that the place of wrong for conflict of laws purposes (where the last event necessary to liability occurs) dictates the place of the tortious act for jurisdictional purposes. The court distinguished Gray v. American Radiator & Sanitary Corp., where the Illinois Supreme Court interpreted similar language differently, finding that its interpretation was unconvincing and disregarded the plain language of the statute. The court stated, “The language of paragraph 2… is too plain and precise to permit it to be read, as has the Appellate Division, as if it were synonymous with ‘commits a tortious act without the state which causes injury within the state.’” Because Darby’s allegedly negligent manufacturing occurred in Kansas, and Darby did not transact business in New York, the court concluded that New York courts lacked personal jurisdiction over Darby. The court explicitly declined to address the constitutional question of whether minimum contacts were satisfied, as the statutory requirements were not met. The Court emphasized that expansion of the statute’s scope was a legislative, not judicial, matter.