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Posted: December 22, 2016

Situs of Injury for Economic Damage is Where Original Critical Events Took Place

On December 7, 2016, Justice Bransten of the New York County Commercial Division issued a decision in Ace Decade Holdings Ltd. v. UBS AG, 2016 NY Slip Op. 32415(U), holding that in evaluating the existence of personal jurisdiction under CPLR § 302(a)(3), the location of the original critical events upon which a claim for economic damage is based is the location of the injury, explaining:

Long-arm jurisdiction is appropriate where a defendant commits a tortious act without the state causing injury to person or property within the state. To avail itself of this clause, a plaintiff must also allege that the defendant regularly does or solicits business in New York, or expects or should reasonably expect the act to have consequences in New York and derives substantial revenue from interstate or international commerce. Plaintiff must allege that its injury occurred within New York. For purposes of CPLR § 302(a)(3), it has long been held that the residence or domicile of the injured party within a State is not a sufficient predicate for jurisdiction, which must be based upon a more direct injury within the State and a closer expectation of consequences within the State than the indirect financial loss resulting from the fact that the injured person resides or is domiciled there. For long-arm purposes, the situs of the injury is where the events giving rise to the injury occurred, not where the resultant damages occurred. In the context of a commercial tort, where the damage is only economic, the situs of injury is where the original critical events associated with the action or dispute took place.

. . .

[T]he record makes clear that the original critical events associated with the Investment occurred in Hong Kong. Plaintiff’s funds were disbursed to a Chinese company in Hong Kong to purchase shares traded on the Hong Kong Stock Exchange. The only connection to New York is that Plaintiff moved here after entering into all relevant agreements and committing to make the Investment. But the occurrence of financial consequences in New York due to the fortuitous location of plaintiffs in New York is not a sufficient basis for jurisdiction under § 302(a)(3) where the underlying events took place outside New York.

(Internal quotations and citations omitted).

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