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Posted: April 21, 2015

Negotiation of Contracts in New York Supports Assertion of Personal Jurisdiction Here

On April 14, 2015, the First Department issued a decision in Wilson v. Dantas, 2015 NY Slip Op. 03088, reversing a dismissal for lack of personal jurisdiction.

In Wilson, the First Department reversed the trial court’s dismissal of the complaint for lack of personal jurisdiction, explaining:

Under New York’s long-arm jurisdiction statute, a court may exercise personal jurisdiction over any non-domiciliary who transacts any business within the state. By this single act statute proof of one transaction in New York is sufficient to invoke jurisdiction so long as the defendant’s activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted. Determining whether long-arm jurisdiction exists under the transacts business provision of CPLR 302(a)(1), therefore, is a two-pronged inquiry: a court must decide (1) whether the defendant transacts any business in New York and, if so, (2) whether [the] cause of action arises from such a business transaction. Both prongs must be met in order for personal jurisdiction to attach. In effect, the arise-from prong limits the broader transaction-of-business’ prong to confer jurisdiction only over those claims in some way arguably connected to the transaction.

The assertion of personal jurisdiction must also be predicated on a defendant’s minimal contacts with New York to comport with due process. This requires an examination of the quality and the nature of the defendant’s activity and a finding of some act by which the defendant purposefully avails itself of the privilege of conducting activities within New York, thus invoking the benefits and protection of its laws.

The first prong of the inquiry, whether the Opportunity defendants transacted any business in New York, is satisfied, based on the Shareholder Agreement as well as the broader transaction establishing and implementing the side-by-side investment structure. . . . .

Accepting as true the allegation that all three agreements were drafted in New York by Citibank’s lawyers, and drawing inferences in the plaintiff’s favor, as we must on a motion to dismiss under CPLR 3211(a)(8), we must infer that defendants engaged in negotiations with Citibank in New York so that those agreements could be drafted; it is hardly believable that defendants would have attended a meeting in New York in December 1997 to execute these complex contracts without having negotiated their terms. Moreover, plaintiff alleges that Citibank’s lawyers drafted the documents in New York. To determine that the agreements were not at least partially negotiated here, as the dissent would have us do, is to draw inferences in defendants’ favor. Contrary to the dissent, however, our inference is appropriate, especially because there has been no discovery. And regardless, the nature and purpose of a solitary business meeting conducted for a single day in New York may supply the minimum contacts necessary to subject a nonresident participant to the jurisdiction of our courts. This was not a purely ministerial act of merely executing a contract in New York that had been negotiated elsewhere, which would likely be insufficient to confer personal jurisdiction. Therefore, although the complaint may have been inartfully drafted in part, we infer from the complaint that the Shareholder Agreement was negotiated in New York.

. . .

Next, we must determine whether plaintiff’s causes of action arise from” defendants New York contacts. The standard does not require plaintiff to have been involved in the transaction; rather, plaintiff need only demonstrate that, in light of all the circumstances, there is an articulable nexus or substantial relationship between the business transaction and the claim asserted. The Court of Appeals has consistently held that causation is not required, and that the inquiry under the statute is relatively permissive.

. . .

Here, plaintiff’s causes of action are even more closely related to defendants New York contacts than was the case in Licci. To the extent his claims arise solely from the Shareholder Agreement, as the motion court determined, there is an articulable nexus between that transaction and his claims, because the Shareholder Agreement was formed in New York and his claims seeking compensation arise directly from it. Yet Licci dictates that we should not view the arising from prong so narrowly. That is, for the purposes of personal jurisdiction under CPLR 302(a)(1), plaintiff’s causes of action do not arise solely from the Shareholder Agreement. Rather, his compensation was simply one component of a much broader business transaction, the establishment of the side-by-side investment program. The Shareholder Agreement was drafted by Citibank’s New York lawyers and simultaneously executed with the other two operative agreements; despite the contracts’ different forum selection clauses and merger clauses, there was an articulable nexus between plaintiff’s claim for compensation and the overall transaction that occurred in New York and the resulting investment scheme that continued for nearly a decade.

(Internal quotations and citations omitted) (emphasis added). This decision shows how successfully to plead limited contacts with New York in such a way as to establish personal jurisdiction in New York.

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