New York Law Review

Tag: Tortious Act

  • 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.

  • Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13 (1970): Long-Arm Jurisdiction and Tortious Acts

    Parke-Bernet Galleries, Inc. v. Franklyn, 26 N.Y.2d 13 (1970)

    A defendant’s failure to act while physically present in one state does not constitute a tortious act committed in another state, even if the omission has consequences in the latter.

    Summary

    This case addresses the scope of New York’s long-arm statute concerning personal jurisdiction over non-residents. The plaintiff, a New York corporation, sued a Florida resident, who was a director, for failing to perform his duties in New York. The defendant remained in Florida and did not attend meetings or perform any director duties in New York. The court held that the defendant’s failure to act in New York while physically in Florida did not constitute a tortious act committed within New York, precluding personal jurisdiction under CPLR 302(a)(2). The court distinguished between acts and omissions, emphasizing that an omission cannot be an act in a particular place unless the person is physically present there.

    Facts

    1. Franklyn, the defendant, resided in Florida.
    2. Parke-Bernet Galleries, Inc., the plaintiff, was a New York corporation.
    3. Franklyn was a director of the plaintiff corporation.
    4. The plaintiff sued Franklyn for failing to attend director’s meetings in New York and neglecting his director duties, resulting in corporate losses.
    5. Franklyn never came to New York for any corporate business. Instead, he executed consents, waivers of notice, and a certificate in lieu of a meeting, all in Florida.

    Procedural History

    The plaintiff served the defendant with process in Florida. The defendant challenged the court’s jurisdiction under New York’s long-arm statute. The Special Term initially sustained jurisdiction, as did the Appellate Division. This appeal followed after the Court of Appeals decision in Feathers v. McLucas, which clarified the requirements for long-arm jurisdiction in tort cases.

    Issue(s)

    1. Whether a director’s failure to attend meetings or perform duties in New York, while physically remaining in Florida, constitutes a “tortious act” committed within New York under CPLR 302(a)(2), thus establishing personal jurisdiction.
    2. Whether the defendant’s actions in Florida related to the directorship constitute transacting business within New York under CPLR 302(a)(1).

    Holding

    1. No, because the failure to act while physically present in one state is not an “act” committed in another, even if it has consequences there.
    2. No, because the defendant never conducted any business in New York related to the corporation.

    Court’s Reasoning

    The court reasoned that CPLR 302(a)(2) requires the defendant to commit a tortious act “within the state.” The court emphasized the distinction between an act and an omission, stating, “The failure of a man to do anything at all when he is physically in one State is not an ‘act’ done or ‘committed’ in another State. His decision not to act and his not acting are both personal events occurring in the physical situs.” The court referenced Feathers v. McLucas to support its interpretation of the statute’s plain words. The court distinguished this case from Gray v. American Radiator & Sanitary Corp., an Illinois case with a similar statute, as it would not support jurisdiction under these facts even if the Gray rule were applied in New York. Furthermore, the court rejected the argument that the defendant transacted business in New York under CPLR 302(a)(1), stating that the defendant never entered New York to conduct any business related to the corporation. The court emphasized that accepting the directorship and executing documents in Florida were insufficient to establish jurisdiction in New York. The court noted legislative proposals to broaden New York’s long-arm statute but observed that even the proposed language would not encompass jurisdiction over the defendant in this case. In essence, the court adhered to a strict interpretation of the long-arm statute, requiring a physical connection to New York for a tortious act to be deemed committed within the state.

  • Kramer v. Vogl, 17 N.Y.2d 27 (1966): Establishes Limits on Long-Arm Jurisdiction for Out-of-State Businesses

    17 N.Y.2d 27 (1966)

    A non-domiciliary’s transaction of business within New York, for purposes of long-arm jurisdiction under CPLR 302(a)(1), requires more than merely shipping goods into the state pursuant to an order sent from within the state; the cause of action must arise from in-state business activity.

    Summary

    Kramer, a New York resident, sued Vogl, an Austrian leather producer, for fraud, alleging that Vogl falsely promised Kramer exclusive U.S. distribution rights. Kramer claimed he relied on these promises, purchasing and promoting Vogl’s leather, only to discover Vogl was also selling to another distributor, Chilewich. Service was made on Vogl in Austria. The New York Court of Appeals held that New York courts lacked personal jurisdiction over Vogl. The court reasoned that Vogl’s actions did not constitute transacting business within New York under CPLR 302(a)(1) because Vogl had no direct sales, promotion, or advertising activities in the state. Furthermore, the tortious act did not occur within New York under CPLR 302(a)(2), as all actions by Vogl occurred in Europe. The court affirmed the dismissal of the action.

    Facts

    Plaintiff Kramer, a New York leather importer, claimed that Defendants Vogl, Austrian leather producers doing business as “Yogi”, fraudulently induced him into becoming their exclusive U.S. distributor. Vogl allegedly promised Kramer exclusive distribution rights (except for one specific customer) to incentivize Kramer to purchase and promote Yogi leathers. Kramer purchased large quantities of leather from Vogl between August 1960 and March 1962, and again in March 1962 when the agreement was allegedly renewed with the same exclusivity assurances. However, Kramer asserted that Vogl had already arranged to sell to Chilewich and associated companies by the time of the renewal in March 1962. All shipments from Vogl to Kramer were f.o.b. European ports. Vogl never conducted direct sales, promotion, or advertising within New York. The initial agreement was formed at a meeting in Paris in 1959, followed by a confirmation letter from Vogl in Austria to Kramer in New York. Kramer purchased the leather outright; he was not paid on commission or salary.

    Procedural History

    Kramer sued Vogl in New York, serving them in Austria. Vogl moved to dismiss for lack of personal jurisdiction, arguing they transacted no business in New York. The lower courts granted the motion to dismiss. The Appellate Division affirmed. Kramer appealed to the New York Court of Appeals, which granted leave to appeal.

    Issue(s)

    1. Whether the defendant’s actions constituted commission of a tortious act within New York State under CPLR 302(a)(2)?
    2. Whether the defendant’s actions constituted transacting business within New York State under CPLR 302(a)(1), such that New York courts could exercise personal jurisdiction over the non-domiciliary defendants?

    Holding

    1. No, because under CPLR 302(a)(2), the defendant’s act or omission must occur within the State of New York, and in this case, all actions by Vogl occurred in Europe.
    2. No, because the cause of action did not arise from the transaction of business within the state, as the defendants did not conduct any direct sales, promotion, or advertising activities in New York.

    Court’s Reasoning

    Regarding the tortious act claim under CPLR 302(a)(2), the court relied on its prior decisions in Feathers v. McLucas and Singer v. Walker, clarifying that the statute requires the tortious act itself to be committed within New York, not just the injury. The court emphasized that the statutory phrase is not synonymous with “commits a tortious act without the state which causes injury within the state.” Here, all of Vogl’s actions took place in Europe, negating jurisdiction under this provision.
    Regarding the transaction of business claim under CPLR 302(a)(1), the court acknowledged its liberal interpretation of the statute but stated that the facts did not meet the threshold. The court distinguished the case from situations where a non-resident defendant has local salesmen or solicits business in New York through catalogs or advertisements. In this case, Vogl merely sold goods f.o.b. to a local distributor. The court noted that Vogl’s sales to Kramer represented a small percentage of Vogl’s overall sales. Therefore, the cause of action could not be said to have arisen out of any transaction of business within the state. The court declined to decide whether it would be constitutional for New York to exercise jurisdiction over any outsider who ships goods into the state.

  • 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.