Commercial Division Blog

Posted: April 26, 2020 / Categories Commercial, Jurisdiction

Acts in New York are Insufficient Basis for Personal Jurisdiction When The Claim is not Based on Those Acts

On April 9, 2020, Justice Sherwood of the New York County Commercial Division issued a decision in Access Advantage Master, Ltd. v. Alpha Prime Fund Ltd., 2020 NY Slip Op. 30932(U), holding that acts in New York are an insufficient basis for asserting personal jurisdiction when the plaintiff's claim is not based on those acts, explaining:

Plaintiff contends this court has jurisdiction over the defendant pursuant to CPLR 302(a)(l), which provides a court may exercise personal jurisdiction over any non-domiciliary, who in person or through an agent: 1. transacts any business within the state or contracts anywhere to supply goods or services in the state. CPLR 302(a)(l) grants New York courts jurisdiction over non-domiciliaries when the action arises out of the non-domiciliaries' transact[ion of] any business within the state. In order to determine whether personal jurisdiction exists under CPLR 302(a)(l), a court must determine (1) whether the defendant transacted business in New York and, if so, (2) whether the cause of action asserted arose from that transaction. In order to satisfy the second prong of the jurisdictional inquiry, there must be an articulable nexus or a substantial relationship between a defendant's in-state activity and the cause of action asserted.

Notably, CPLR 302(a)(1) is a single act statute in that physical presence in New York is not required and only one New York transaction is sufficient. However, jurisdiction may attach under this section only as to a cause of action arising from the transaction of business within the state or contracts anywhere to supply goods or services in the state. The statute is only applicable where the defendant's New York activities were purposeful and substantially related to the claim. Purposeful activities are those with which a defendant, through volitional acts, avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

A defendant may not be subject to personal jurisdiction under CPLR 302(a)(1) simply because her contact with New York was a link in the chain of events giving rise to the cause of action. This case presents such an instance. The investment in BLMIS and its subsequent bankruptcy are links in the chain which occur in New York, but the events at issue in this dispute are the redemption request, the decisions by defendant to suspend redemptions, and defendant's failure to pay, once it arguably had the funds. If defendant's conduct in making the investment in BLMIS constitutes doing business in New York, it is insufficiently related to the claim here to support jurisdiction.

(Internal quotations and citations 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 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.