Commercial Division Blog
Defendant Waived Lack of Personal Jurisdiction Defense By Bringing Earlier, Related Action
On February 19, 2019, Justice Scarpulla of the New York County Commercial Division issued a decision in Magomedov v. Lebedev, 2019 NY Slip Op. 30378(U), holding that a defendant waived his defense of lack of personal jurisdiction by bringing an earlier, related action, explaining:
Lebedev first argues that this action should be dismissed against him because New York lacks jurisdiction over him. In opposition, plaintiffs do not dispute that Lebedev is not a domiciliary of New York and therefore, no general jurisdiction exists over him. Instead, plaintiffs argue that long arm jurisdiction exists over Lebedev, pursuant to CPLR 302(a)(l), vis-a-vis the 2014 Agreement. Plaintiffs further argue that Lebedev waived any objection to jurisdiction by selecting a New York state court to litigate the Lebedev Action.
Under CPLR 302(a)(l), jurisdiction may be exercised over an out-of-state defendant if that defendant transacted any business within the state or contracted anywhere to supply goods or services in the state. Although the 2014 Agreement does not support jurisdiction over Lebedev for all claims asserted against him, I find that it does support jurisdiction over him as to the fourth cause of action for breach and anticipatory breach of the 2014 Agreement.
Here, plaintiffs allege that they agreed to collaborate with Lebedev in litigating the Lebedev Action pursuant to the 2014 Agreement. To pursue that action, Lebedev transacted business here by hiring New York counsel, and allegedly contracted out-ofstate for plaintiffs' assistance in the Lebedev Action in New York. Because plaintiffs allege that Lebedev breached the 2014 Agreement, a contract which is directly related to the business Lebedev transacted in New York, the fourth cause of action for breach and anticipatory breach of contract arises sufficiently from Lebedev's activities in New York to confer jurisdiction.
Moreover, I find that Lebedev waived his jurisdictional defense as to claims predating the 2014 Agreement by selecting New York to litigate the Lebedev Action. The Appellate Division, First Department has recognized the inequity of a party objecting to jurisdiction when that same party seeks affirmative relief in a related action in the same forum. Although Lebedev is objecting to jurisdiction as to claims asserted by plaintiffs, who are not parties to the Lebedev Action, that distinction does not compel a contrary conclusion under the facts alleged here and the undisputed close relationship between the parties and the transactions at issue.
Plaintiffs' claims against Lebedev in this action, other than claims involving the 2014 Agreement, depend on Lebedev proving, in the Lebedev Action, that Defendants' Joint Venture exists. Absent such a determination in the Lebedev Action, plaintiffs' claims in this action pre-dating the 2014 Agreement fail. Thus, many of plaintiffs' claims in this action are entirely dependent on the claims asserted in the Lebedev Action.
Because of the exceptionally close interdependent relationship between the parties, transactions and causes of action alleged in this action and the Lebedev Action, I find that Lebedev has waived any jurisdictional defense to litigating both actions in New York. Accordingly, I deny Lebedev's motion to dismiss this action against him based on lack of jurisdiction.
(Internal quotations and citation omitted).
This decision illustrates an issue that often arises in commercial litigation in New York. Whether the defendant is located on the other side of the world or across the Hudson in New Jersey, a New York court cannot assert jurisdiction over the defendant (that is, hear a case against it) unless there is a proper connection between the defendant and New York. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client face a situation where you are unsure whether there is jurisdiction over you, or over a party with which you are having a dispute, in New York.