New York Law Review

Tag: personal jurisdiction

  • Royal Zenith Corp. v. Continental Ins. Co., 63 N.Y.2d 975 (1984): Enforceability of Default Judgments After Jurisdictional Basis is Invalidated

    Royal Zenith Corp. v. Continental Ins. Co., 63 N.Y.2d 975 (1984)

    A default judgment obtained against a defendant based on a jurisdictional theory later deemed unconstitutional is a nullity and cannot be enforced against the defendant’s insurer, who stands in the shoes of the insured.

    Summary

    Royal Zenith Corp. (Royal Zenith) sought to enforce a default judgment against Continental Insurance Company (Continental), the insurer of Container Service Company (Container). The initial judgment against Container was based on a Seider v. Roth attachment, which allowed jurisdiction based on the presence of an insurance policy in New York. However, after the default judgment was entered, the Supreme Court declared such attachments unconstitutional in Rush v. Savchuk. The New York Court of Appeals held that because the original basis for jurisdiction over Container was invalid, the default judgment was a nullity and unenforceable against Continental.

    Facts

    Royal Zenith sued Container, a foreign trucking company, for damages to a printing press. Jurisdiction over Container was obtained through a Seider v. Roth attachment of a liability insurance policy issued by Continental, a New York corporation. Continental disclaimed coverage, and neither Container nor Continental defended the action. Royal Zenith obtained a default judgment against Container. When neither Container nor Continental satisfied the judgment, Royal Zenith sued Continental directly under Insurance Law § 167(1)(b) to enforce the judgment.

    Procedural History

    Royal Zenith initially obtained a default judgment against Container. Subsequently, Royal Zenith sued Continental to enforce that judgment. Special Term denied both Royal Zenith’s motion for summary judgment and Continental’s cross-motion to dismiss. The Appellate Division modified, granting Continental’s cross-motion and dismissing the complaint. Royal Zenith appealed to the New York Court of Appeals.

    Issue(s)

    Whether a default judgment, obtained based on a Seider v. Roth attachment later declared unconstitutional, is enforceable against the defendant’s insurer in a direct action under Insurance Law § 167(1)(b).

    Holding

    No, because the attachment had no validity as a basis for personal jurisdiction over Container, it follows that the default judgment against Container is a nullity and may not be enforced against respondent, who stands in the shoes of Container, its insured.

    Court’s Reasoning

    The Court of Appeals reasoned that a court lacks the power to render judgment against a party over whom it has no jurisdiction, citing World-Wide Volkswagen Corp. v. Woodson. A judgment rendered without jurisdiction is subject to collateral attack. Because the Seider attachment was deemed an unconstitutional basis for personal jurisdiction after the default judgment was entered, the judgment against Container was a nullity. The court distinguished Gager v. White, where a defendant appeared in the action without raising a jurisdictional challenge. In this case, neither Container nor Continental participated in the original action, so they did not waive the jurisdictional objection. The court stated, “Because the attachment had no validity as a basis for personal jurisdiction over Container, it follows that the default judgment against Container is a nullity…and may not be enforced against respondent, who stands in the shoes of Container, its insured.” This decision highlights the importance of valid personal jurisdiction and the consequences of proceeding under a jurisdictional theory that is later invalidated.

  • Etra v. Matta, 61 N.Y.2d 455 (1984): Establishing Personal Jurisdiction Over Non-Resident Physicians

    Etra v. Matta, 61 N.Y.2d 455 (1984)

    A non-resident physician’s limited contacts with New York, such as consulting with a New York physician and providing an experimental drug as part of treatment initiated outside New York, are insufficient to establish personal jurisdiction in a New York medical malpractice suit.

    Summary

    This case addresses the limits of personal jurisdiction over a non-resident physician in a medical malpractice action. The New York Court of Appeals held that a Massachusetts physician, Dr. Lown, who treated a patient in Massachusetts and consulted with a New York physician after the patient returned to New York, did not have sufficient contacts with New York to warrant the exercise of personal jurisdiction. The court reasoned that Dr. Lown’s actions, including providing an experimental drug and consulting with the New York doctor, were incidental to the treatment initiated in Massachusetts and did not constitute transacting business in New York.

    Facts

    Plaintiffs’ decedent sought treatment from Dr. Lown in Massachusetts for a heart condition. Dr. Lown prescribed an experimental drug, Aprindine. After discharge, the patient returned to New York and was treated by Dr. Matta, a New York physician, to whom Dr. Lown referred the patient. Dr. Lown continued to consult with Dr. Matta via phone and letter regarding the Aprindine regimen and allegedly sent an additional supply of the drug to the patient in New York. The patient was later admitted to a New York hospital and died shortly after Aprindine treatment was discontinued.

    Procedural History

    Plaintiffs sued Dr. Matta and the drug manufacturer in New York, alleging that the decedent’s death was caused by a side effect of Aprindine. Dr. Matta impleaded Dr. Lown, alleging Dr. Lown failed to inform him of the drug’s precise side effects. Dr. Lown moved to dismiss the third-party complaint for lack of personal jurisdiction. The Appellate Division agreed with Dr. Lown. The New York Court of Appeals affirmed the Appellate Division’s order, finding no basis for personal jurisdiction over Dr. Lown in New York.

    Issue(s)

    Whether Dr. Lown’s contacts with New York, including consulting with Dr. Matta and providing Aprindine, constitute transacting business within the state under CPLR 302(a)(1), thus subjecting him to personal jurisdiction in New York. Whether Dr. Lown contracted to supply goods or services in New York, within the meaning of CPLR 302(a)(1), subjecting him to personal jurisdiction in New York.

    Holding

    No, because Dr. Lown’s contacts were insubstantial and did not amount to transacting business within New York as contemplated by CPLR 302(a)(1). No, because the provision of Aprindine was incidental to medical treatment rendered primarily in Massachusetts and was not the type of transaction the legislature intended to cover under CPLR 302(a)(1).

    Court’s Reasoning

    The court reasoned that Dr. Lown’s contacts with New York were insufficient to constitute a transaction of business within the state. The court emphasized that Dr. Lown had referred the patient to a New York physician, and his subsequent communications and provision of the drug were merely consultative. The court cited McGowan v Smith, 52 NY2d 268 and Rothschild, Unterberg, Towbin v McTamney, 89 AD2d 540, affd 59 NY2d 651, to support the principle that the contacts must be substantial to warrant subjecting a non-domiciliary to suit in New York. Regarding the supply of Aprindine, the court stated that the amendment to CPLR 302(a)(1) was “not meant, in our view, to cover a transaction of this nature…The incidental provision of a drug, as part of a course of treatment rendered in another State, cannot be said to fall within the contemplation of the statute so as to confer personal jurisdiction over the physician.” The court focused on the limited nature of Dr. Lown’s involvement in New York, emphasizing that the primary treatment occurred in Massachusetts, and his subsequent actions were merely ancillary to that treatment. The court implied that allowing jurisdiction in such a case would unduly burden physicians who treat patients from other states.

  • Shapiro v. McNeill, 92 A.D.2d 1092 (1983): Requirements for a Binding Stipulation

    Shapiro v. McNeill, 92 A.D.2d 1092 (1983)

    A stipulation in an action is not binding unless it is made in open court, contained in a writing subscribed by the party or his attorney, or reduced to the form of an order and entered.

    Summary

    This case addresses the requirements for a valid and binding stipulation between parties in a legal action. Plaintiff’s attorney sent defendant’s attorney a stipulation to extend the time to answer or move to dismiss. Plaintiff’s attorney modified the stipulation by striking the motion to dismiss clause and adding a clause admitting service and jurisdiction, and then returned the stipulation. Defendant then filed an answer including a defense that the court lacked personal jurisdiction. The New York Court of Appeals held that because the defendant did not sign the modified stipulation, it was not binding under CPLR 2104. Therefore, the defendant was not barred from including the jurisdictional defense in the answer.

    Facts

    Defendant’s attorney sent a proposed stipulation to Plaintiff’s attorney, seeking an extension of time for Defendant to file an answer or move to dismiss the complaint.

    Plaintiff’s attorney modified the stipulation by:

    (1) Striking out the provision allowing Defendant to make a motion to dismiss, and

    (2) Adding a provision stating Defendant admitted the propriety of service and jurisdiction.

    Plaintiff’s attorney then signed and returned the modified stipulation.

    Defendant’s attorney filed an answer asserting lack of personal jurisdiction as an affirmative defense.

    Procedural History

    The trial court dismissed Plaintiff’s complaint based on lack of personal jurisdiction. The Appellate Division affirmed the dismissal. The New York Court of Appeals then reviewed the Appellate Division’s order.

    Issue(s)

    Whether the defendant, by relying on the beneficial terms of the proposed stipulation (extending time to answer), waived the defense of lack of personal jurisdiction, or should be estopped from asserting that defense, even though the stipulation was modified by the plaintiff and not signed by the defendant.

    Holding

    No, because the purported agreement did not amount to a valid stipulation since the defendant did not sign it as modified. Therefore, the defendant was not barred from including the jurisdictional defense in the answer.

    Court’s Reasoning

    The Court of Appeals relied on CPLR 2104, which dictates the requirements for a binding stipulation. CPLR 2104 states that a stipulation is only binding if it is: (1) made in open court between counsel, (2) contained in a writing subscribed by the party or his attorney, or (3) reduced to the form of an order and entered. Because the defendant did not sign the stipulation as modified by the plaintiff, the court found the stipulation not binding. The Court stated, “We conclude that the purported agreement did not amount to a valid stipulation upon which plaintiff could rely to preclude defendant’s assertion of the lack of jurisdiction or extend his time to answer. A stipulation concerning any matter in an action is not binding unless it is made in open court between counsel, contained in a writing subscribed by the party or his attorney, or reduced to the form of an order and entered (CPLR 2104). The claimed stipulation is not binding upon defendant, because he did not sign it as modified. Accordingly, there was no bar to inclusion of the jurisdictional defense in the answer.” The court also noted that although the defendant’s answer was untimely, the plaintiff never moved for a default judgment on that basis, meaning the plaintiff waived the untimeliness argument.

  • Markoff v. South Nassau Community Hospital, 61 N.Y.2d 283 (1984): Recommencement Statute Requires Valid Initial Service

    Markoff v. South Nassau Community Hospital, 61 N.Y.2d 283 (1984)

    CPLR 205(a), the statute allowing for recommencement of an action after dismissal, requires that the initial action be timely commenced with proper service; an action dismissed for lack of personal jurisdiction due to improper service is not considered “commenced” for the purposes of the statute, even if the defendant had actual notice.

    Summary

    Plaintiff sued defendants for medical malpractice and wrongful death. The initial attempt at service was deemed invalid, and the ex parte order authorizing expedient service was vacated. After the statute of limitations had expired, the plaintiff properly served the defendants. The Court of Appeals held that CPLR 205(a) did not apply because the original action was never properly commenced due to the lack of valid service. The Court emphasized that actual notice to the defendant does not cure a failure to comply with the prescribed methods of service. Therefore, the action was time-barred.

    Facts

    Milton Markoff was treated at South Nassau Community Hospital by defendant doctors in October 1978. He died eight months later, allegedly due to the defendants’ malpractice. Plaintiff Ruth Markoff, individually and as executrix, attempted to commence an action for medical malpractice and wrongful death.

    Procedural History

    Plaintiff initially attempted service on July 14, 1980, which was unsuccessful. On March 19, 1981, plaintiff obtained an ex parte order authorizing expedient service. Summonses were left at the hospital for the defendant doctors on March 30, 1981. The defendants asserted lack of personal jurisdiction and moved to vacate the ex parte order, which was granted in May 1981. The action was terminated on September 23, 1981, for lack of personal jurisdiction. In late August and early September 1981, the plaintiff personally served the defendants. The defendants raised the statute of limitations as a defense. The plaintiff argued the answer was untimely and that CPLR 205 applied. The defendants successfully moved to vacate the default and to dismiss the action based on the statute of limitations. The Appellate Division affirmed the vacatur of the ex parte order and the dismissal of the complaint. The Court of Appeals then reviewed the case.

    Issue(s)

    Whether CPLR 205(a) applies to allow recommencement of an action when the initial action was dismissed for lack of personal jurisdiction due to improper service, even if the defendant had actual notice of the action.

    Holding

    No, because CPLR 205(a) requires that the initial action be timely commenced, and an action dismissed for lack of personal jurisdiction due to improper service is not considered “commenced” under the statute, regardless of actual notice.

    Court’s Reasoning

    The Court of Appeals reasoned that CPLR 205(a) allows a plaintiff to commence a new action within six months of the termination of a prior action if the prior action was “timely commenced.” The Court stated that an action is “commenced” when there has been service of a summons, but such service is only effective when made pursuant to the appropriate method authorized by the CPLR. The Court emphasized that “actual notice alone will not sustain the service or subject a person to the court’s jurisdiction when there has not been compliance with prescribed conditions of service.” The Court distinguished this situation from cases where the court had subject matter jurisdiction, noting that here, the lack of personal jurisdiction in the first action meant it was never properly “commenced.” The Court stated it was not creating a new exception to CPLR 205(a), but rather clarifying that a timely commencement is a condition precedent to invoking the statute. Because the ex parte order authorizing alternative service was vacated, the initial service was nullified, and the plaintiff’s later service occurred after the statute of limitations had run, barring the action.

  • Parke-Bernet Galleries, Inc. v. Franklyn, 41 N.Y.2d 103 (1976): Establishing Jurisdiction Based on Business Transactions and Tortious Acts

    Parke-Bernet Galleries, Inc. v. Franklyn, 41 N.Y.2d 103 (1976)

    A New York court lacks personal jurisdiction over non-residents when their activities in New York are minimal and do not constitute transacting business or causing tortious injury within the state.

    Summary

    Parke-Bernet Galleries sued Florida residents in New York to recover property transferred as compensation for services. The defendants moved to dismiss for lack of personal jurisdiction. The New York Court of Appeals affirmed the dismissal, holding that the defendants’ limited contacts with New York, such as contacting banks for property appraisals and a single visit to view property, did not constitute transacting business within the state under CPLR 302(a)(1). Furthermore, the alleged tortious conduct (fraud and misrepresentation) did not occur in New York, nor did it cause injury to person or property in New York, precluding jurisdiction under CPLR 302(a)(2) and (3).

    Facts

    Plaintiffs transferred real and personal property in Florida to defendants, who resided in Florida, as compensation for services related to a tax-saving plan. The plan involved transferring assets in trust to a Georgia-based tax-exempt corporation. Real property in New York was conveyed to the charitable corporation as the trust res. The plaintiffs alleged that the defendants contacted New York banks for property appraisals. One defendant visited New York to view the property with a representative of the charitable corporation. The plaintiffs alleged fraud and deceit in obtaining compensation, including collusion with the tax-exempt corporation and misrepresentation of legal authority to conduct business in New York. All negotiations and payment of compensation occurred in Florida.

    Procedural History

    Plaintiffs brought suit in New York seeking to recover real and personal property. Defendants cross-moved to dismiss the complaint for lack of personal jurisdiction in response to a motion by plaintiffs to compel examination before trial. The Appellate Division granted the defendants’ cross-motion to dismiss. The New York Court of Appeals affirmed the Appellate Division’s order.

    Issue(s)

    1. Whether the defendants were transacting business within the State of New York within the contemplation of CPLR 302(a)(1) such that personal jurisdiction could be established.
    2. Whether the defendants committed a tortious act within or without the State of New York, causing injury to person or property within the state under CPLR 302(a)(2) and (3), thereby establishing personal jurisdiction.

    Holding

    1. No, because the defendants’ activities in New York were minimal and did not constitute a purposeful availment of the privilege of conducting activities within the state, thus not satisfying the requirements of CPLR 302(a)(1).
    2. No, because the alleged tortious conduct did not occur in New York, nor did it cause injury to person or property within the state, thus precluding jurisdiction under CPLR 302(a)(2) and (3).

    Court’s Reasoning

    The Court reasoned that the plaintiffs failed to demonstrate that the defendants transacted business in New York within the meaning of CPLR 302(a)(1). The negotiations, agreement for compensation, and payment all occurred in Florida. The defendants’ contacts with New York, limited to contacting banks for appraisals and a single visit to view the property, were insufficient to establish jurisdiction. These activities did not constitute the purposeful transaction of business within the state, nor did they establish a direct relationship between the cause of action and the defendants’ contacts with New York.

    Regarding the alleged tortious conduct, the Court found no evidence that any misconduct occurred in New York or that any injury was caused to person or property in New York. “Whatever may be said of the legal sufficiency of these allegations, there is no showing that any of the misconduct charged took place in New York or that any injury was caused to person or property in New York.” Therefore, jurisdiction could not be sustained under CPLR 302(a)(2) or (3).

    The Court emphasized that the burden of proof rests on the party asserting jurisdiction to demonstrate an adequate basis for it. The plaintiffs failed to meet this burden by providing sufficient evidence of the defendants’ activities in New York.

  • Rovello v. Orofino Realty Co., 40 N.Y.2d 633 (1976): Motion to Dismiss After Answer Requires Notice of Summary Judgment Conversion

    40 N.Y.2d 633 (1976)

    When a motion to dismiss for lack of personal jurisdiction is made after the answer has been filed, the motion must be treated as one for summary judgment, and the court must give the parties notice that it will be so treated.

    Summary

    This case addresses the proper procedure for a defendant who wishes to challenge personal jurisdiction after filing an answer. The defendant, a physician, argued improper service in a malpractice and product liability suit. Although the defendant raised the jurisdictional defense in his answer, he later moved to dismiss based on CPLR 3211(a)(8). The Court of Appeals held that such a motion, made after the answer, must be treated as a motion for summary judgment under CPLR 3212. Further, the court must provide notice to the parties that the motion will be treated as a summary judgment motion. Because the plaintiff did not receive such notice, the case was remitted for reconsideration.

    Facts

    The plaintiff sued the defendant physician for malpractice and the drug manufacturer for product liability. Service on the physician was attempted via CPLR 308(4), by affixing the summons and complaint to his office door and mailing a copy to his “last known residence.” The defendant argued that the mailed copy was sent to the same address as the “nailed” copy, which was not his residence, and that due diligence was not demonstrated before resorting to substituted service.

    Procedural History

    The defendant stipulated to extend the time to answer, then included a jurisdictional defense in his answer. Nearly two years later, the defendant moved to dismiss under CPLR 3211(a). The plaintiff argued the defendant waived the jurisdictional defense. The lower courts ruled in favor of the defendant. The plaintiff appealed to the Court of Appeals.

    Issue(s)

    Whether a motion to dismiss for lack of personal jurisdiction, made after the answer has been filed, should be treated as a motion for summary judgment; and, if so, whether the court must provide notice to the parties that it will be so treated.

    Holding

    Yes, because CPLR 3211(c) requires that when a motion to dismiss is made after the answer, the court must give adequate notice to the parties that the motion will be treated as one for summary judgment.

    Court’s Reasoning

    The Court reasoned that while CPLR 3211(e) does not explicitly prohibit a motion to dismiss after an answer, CPLR 3212(c) implies that such a motion should be treated as a motion for summary judgment. The court emphasized that under CPLR 3211, a plaintiff is not obligated to submit affidavits on penalty of dismissal, as is the case under CPLR 3212. Quoting from the decision, “CPLR 3211 allows plaintiff to submit affidavits, but it does not oblige him to do so on penalty of dismissal, as is the case under CPLR 3212”.

    The court noted that the Judicial Conference recommended the 1973 amendment to CPLR 3211(c) requiring notice to ensure an appropriate record and submission of facts by the parties. The court held that requiring a motion challenging personal jurisdiction after an answer to be made under CPLR 3212 (or with notice of conversion from 3211 to 3212) reduces potential gamesmanship and allows efficient resolution through immediate trial of factual issues. While a more definite statement of defense could have been requested, CPLR 3013 intended to move pleadings away from rigid formalism. The court found the lower court erred by not giving the plaintiff notice that it would treat the motion to dismiss as one for summary judgment.

  • Addesso v. Shemtob, 70 N.Y.2d 900 (1987): Waiving Jurisdictional Defense Through Pre-Answer Motion

    Addesso v. Shemtob, 70 N.Y.2d 900 (1987)

    A defendant waives the defense of lack of personal jurisdiction by making a pre-answer motion under CPLR 3211(a) without including the jurisdictional objection, even if the motion is later deemed abandoned due to failure to submit an order.

    Summary

    This case addresses the waiver of a personal jurisdiction defense in New York civil procedure. The defendant, Shemtob, made a pre-answer motion to dismiss but failed to include a challenge to personal jurisdiction. Although he argued the motion was abandoned, the Court of Appeals held that by making any CPLR 3211 motion without raising his jurisdictional defense, the defendant waived that defense, regardless of whether the initial motion was ultimately perfected. The court emphasized preventing defendants from strategically delaying jurisdictional challenges.

    Facts

    The plaintiffs, Addesso, sued the defendant, Shemtob. Shemtob made a pre-answer motion to dismiss under CPLR 3211(a)(7) for failure to state a cause of action. However, he did not include a challenge to personal jurisdiction in this motion. Under the rules of the Supreme Court of Kings County, failure to submit an order after a motion constitutes abandonment of the motion. Shemtob asserted that his failure to submit the order meant the motion was a nullity.

    Procedural History

    The plaintiffs moved to strike the affirmative defense of lack of personal jurisdiction. Special Term’s decision regarding the waiver of personal jurisdiction was not explicitly stated. The Appellate Division ruled on the issue. The New York Court of Appeals reversed the Appellate Division’s order, granted the plaintiffs’ motion to strike the affirmative defense, and answered the certified question in the negative.

    Issue(s)

    Whether a defendant waives the affirmative defense of lack of personal jurisdiction by making a motion under CPLR 3211(a) without including the jurisdictional objection, even if the defendant claims the motion was abandoned due to failure to submit an order as per local court rules.

    Holding

    Yes, because CPLR 3211(e) is designed to prevent a defendant from strategically delaying a jurisdictional challenge. By making any motion under 3211 without raising the jurisdictional defense, the defendant waives that defense.

    Court’s Reasoning

    The Court of Appeals reasoned that CPLR 3211(e) aims to prevent defendants from wasting the court’s and the plaintiff’s time by bringing piecemeal motions. The statute requires defendants to consolidate all defenses under CPLR 3211, including jurisdictional ones, into a single motion. The court stated that “[t]he purpose of the waiver provision of CPLR 3211 (subd [e]) is to prevent the defendant from wasting both the “court’s or the plaintiff’s time on any 3211 motion on any ground at all unless on that motion he joins his jurisdictional ground”.” The court rejected the defendant’s argument that the motion was a nullity due to his failure to submit the order, stating that the defendant’s self-serving act of failing to enter the order cannot contravene the legislative purpose of CPLR 3211(e). The court emphasized that the issue, although not raised at Special Term, was properly before the Court of Appeals because it was presented on the record, raised at the Appellate Division, and was conclusive.

  • Banco Ambrosiano, S.P.A. v. Artco Bank. S.A., 54 N.Y.2d 640 (1981): Establishing Personal Jurisdiction Over Foreign Banks

    54 N.Y.2d 640 (1981)

    A correspondent bank relationship alone is insufficient to establish personal jurisdiction over a foreign bank in New York.

    Summary

    Banco Ambrosiano, S.P.A. sued Artco Bank, S.A., as guarantor of a foreign trade acceptance. The New York Court of Appeals affirmed the dismissal of the action for lack of personal jurisdiction. The court held that a correspondent bank relationship between Artco Bank and Credit Lyonnais, coupled with the trade acceptance connected to that relationship, was insufficient to establish that Artco Bank was doing business in New York and therefore subject to the court’s jurisdiction. The court also clarified that an attachment of the defendant’s New York funds after service of the summons could not establish quasi in rem jurisdiction.

    Facts

    Banco Ambrosiano, S.P.A. (plaintiff) sought to sue Artco Bank, S.A. (defendant) in New York as the guarantor of a foreign trade acceptance.

    The plaintiff attempted to establish jurisdiction over Artco Bank based on Artco’s correspondent banking relationship with Credit Lyonnais in New York.

    After serving the summons, the plaintiff attached Artco Bank’s funds held in New York.

    Procedural History

    The trial court initially heard the case.

    The Appellate Division dismissed the action for lack of jurisdiction. Specifically, the Appellate Division order dated November 3, 1978, was appealed, and the order dated August 1, 1977, was brought up for review.

    The New York Court of Appeals affirmed the Appellate Division’s dismissal.

    Issue(s)

    Whether a correspondent bank relationship and a trade acceptance connected to that relationship are sufficient to establish personal jurisdiction over a foreign bank in New York.

    Whether the attachment of a defendant’s New York funds after service of the summons can form the predicate for quasi in rem jurisdiction.

    Holding

    No, because a correspondent bank relationship and a trade acceptance, standing alone, are insufficient to demonstrate that the defendant is doing business in New York.

    No, because the attachment of funds must precede service of the summons to establish quasi in rem jurisdiction.

    Court’s Reasoning

    The Court of Appeals reasoned that merely having a correspondent bank relationship does not equate to “doing business” within the state for jurisdictional purposes. The court cited Amigo Foods Corp. v Marine Midland Bank-N. Y., 39 NY2d 391 to support this proposition.

    The Court emphasized that the plaintiff needed to show more than just a correspondent relationship to establish the defendant’s presence in New York for jurisdictional purposes. The connection to the trade acceptance, stemming from the correspondent relationship, was also deemed insufficient, as it didn’t demonstrate the defendant’s systematic and regular business activity within the state.

    Regarding the attachment of funds, the court relied on CPLR 314(3) and Pennoyer v Neff, 95 US 714, to clarify that the attachment must occur before service of the summons to establish quasi in rem jurisdiction. The attachment here, occurring after service, was ineffective for jurisdictional purposes.

    The court explicitly declined to address the scenario where the attachment precedes service of the summons, referencing Shaffer v Heitner, 433 US 186, indicating an awareness of the evolving standards for asserting jurisdiction over out-of-state defendants based on their property within the state.

    The court stated, “Nothing in the record supports the bald assertion that defendant is doing business and thus present in New York. All that appears is a correspondent bank relationship between defendant and Credit Lyonnais and the trade acceptance connected to that relationship. These factors standing alone are insufficient to support an exercise of in personam jurisdiction”.

  • Presidential Realty Corp. v. Michael Square West, Ltd., 44 N.Y.2d 672 (1978): Establishing Jurisdiction Based on Minimal Contact in New York

    Presidential Realty Corp. v. Michael Square West, Ltd., 44 N.Y.2d 672 (1978)

    Physical presence alone does not automatically establish jurisdiction in New York under CPLR 302(a)(1); the defendant’s activities in the state must be directly related to the transaction to confer jurisdiction.

    Summary

    Presidential Realty Corp. sought to establish jurisdiction in New York over Michael Square West, Ltd., a nonresident, based on a single business meeting held in New York. The contract’s material terms were negotiated outside New York. Presidential Realty argued that modifications to the contract were agreed upon at a meeting in White Plains, New York, and the agreement was signed there. The Court of Appeals held that merely signing an agreement in New York, without sufficient proof of substantial negotiations or other relevant business activity in the state, is insufficient to establish jurisdiction under New York’s long-arm statute.

    Facts

    Presidential Realty Corp. (plaintiff) and Michael Square West, Ltd. (defendant) engaged in negotiations for the sale of a real estate development in Mobile, Alabama. The main contract negotiations occurred in Atlanta, New Orleans, and Mobile, Alabama. Prior to the closing, the plaintiff requested a meeting in its New York office. At this meeting in White Plains, New York, alleged modifications to the contract were discussed, and the defendant’s representative signed a letter incorporating these modifications. The deal was eventually closed in Mobile, Alabama.

    Procedural History

    The plaintiff, Presidential Realty Corp., initiated the lawsuit in New York, attempting to assert personal jurisdiction over the defendant, Michael Square West, Ltd. The lower courts likely ruled on the jurisdictional issue based on CPLR 302(a)(1). The Appellate Division’s order was appealed to the New York Court of Appeals, which affirmed the Appellate Division’s decision.

    Issue(s)

    Whether the defendant’s single-day business meeting and the signing of a contract modification letter in New York constituted sufficient minimum contacts to establish personal jurisdiction under CPLR 302(a)(1), where the primary negotiations occurred outside of New York.

    Holding

    No, because there was insufficient evidence presented to prove that substantial negotiations occurred in New York or that the defendant engaged in other activities purposefully availing itself of the privilege of conducting activities within New York. The mere signing of the modification letter and agreement in New York was insufficient to confer jurisdiction.

    Court’s Reasoning

    The Court of Appeals acknowledged that a single business meeting in New York could, in some circumstances, provide the minimum contacts necessary for jurisdiction. However, it emphasized that “physical presence alone cannot talismanically transform any and all business dealings into business transactions under CPLR 302 (subd [a], par [1]).” The court found that the material terms of the contract were negotiated outside New York. Crucially, the court noted that there was no reliable evidence of the extent, if any, of actual negotiations that occurred during the New York meeting. The plaintiff failed to provide proof “by one having personal knowledge either of the fact or the extent of any negotiations.” The court distinguished this case from others where the defendant purposefully availed itself of the benefits of conducting business in New York, such as in cases where substantial contract negotiations occurred within the state. The court cited Hi Fashion Wigs v Hammond Adv., 32 NY2d 583, 586, emphasizing that simply signing an agreement in New York is not enough to establish jurisdiction.

  • George Reiner & Co., Inc. v. Schwartz, 41 N.Y.2d 648 (1977): Establishing Personal Jurisdiction Based on a Single Business Transaction

    George Reiner & Co., Inc. v. Schwartz, 41 N.Y.2d 648 (1977)

    A non-domiciliary who is physically present in New York and enters into a contract, thereby establishing a continuing relationship with a New York corporation, is subject to personal jurisdiction in New York for causes of action arising from that contract.

    Summary

    George Reiner & Co. sued Arnold Schwartz for violating his employment contract. Schwartz, a Massachusetts resident, argued New York lacked personal jurisdiction. The Court of Appeals held that by traveling to New York, interviewing for a job, and entering into an employment agreement with a New York company, Schwartz purposefully availed himself of the privilege of conducting activities within New York, thus establishing personal jurisdiction. This single transaction was sufficient because it created a continuing relationship and the lawsuit arose directly from that agreement.

    Facts

    Arnold Schwartz, a Massachusetts resident, responded to an advertisement by George Reiner & Co., a New York corporation. At the company’s request and expense, Schwartz traveled to Albany, New York, for an interview. An employment agreement was reached, and Schwartz returned to Massachusetts with a memorandum outlining his sales territory (New England), commission rate, and other employment details. Schwartz worked for Reiner for over four years, covering New England from his Massachusetts home office. Reiner later sued Schwartz, alleging he fraudulently violated the contract by retaining excess drawings over commissions.

    Procedural History

    Reiner sued Schwartz in New York. Schwartz moved to dismiss the action for lack of personal and subject matter jurisdiction. Special Term granted the motion based on lack of personal jurisdiction. The Appellate Division reversed and reinstated the complaint. The New York Court of Appeals granted leave to appeal and certified the question of whether Special Term erred in dismissing the case for lack of personal jurisdiction.

    Issue(s)

    Whether a non-domiciliary, by traveling to New York for a job interview and entering into an employment contract with a New York corporation, transacts business within New York sufficient to establish personal jurisdiction under CPLR 302(a)(1) for a cause of action arising from that contract.

    Holding

    Yes, because by purposefully coming into New York to seek employment, interviewing, and entering into an agreement with a New York employer that contemplated and resulted in a continuing relationship, the defendant availed himself of the privilege of conducting activities in New York, thus invoking the benefits and protection of its laws.

    Court’s Reasoning

    The Court relied on the principle established in International Shoe Co. v. Washington, which requires minimum contacts with the forum state such that maintaining the suit does not offend traditional notions of fair play and substantial justice. The court emphasized that CPLR 302(a)(1) allows for personal jurisdiction over a non-domiciliary who transacts any business within the state, as long as the cause of action arises from that transaction. The Court determined that Schwartz’s physical presence in New York to negotiate and enter into the employment contract constituted the transaction of business within the state. The court stated that this was the “clearest sort of case” for jurisdiction, as the contract, which established a continuing relationship, was made in New York, and the cause of action arose directly from that contract. The court distinguished this case from McKee Elec. Co. v. Rauland-Borg Corp., where the defendant’s contact with New York was a casual attempt to smooth out difficulties, not the purposeful creation of a contractual relationship. The court emphasized that Schwartz “purposefully availed himself of the privilege of conducting activities, in our jurisdiction, thus invoking the benefits and protection of our laws.”