Business deals often go south, which can lead tobreach of contract lawsuitbetween parties. Such civil litigation is often complicated by the fact that parties reside in different states—or even countries. If you live in New York, for instance, can you sue a resident of a foreign country in a New York court?
The answer to this question depends on two things: First, does a New York court have “personal jurisdiction” over the person you want to sue? Second, would asserting that jurisdiction violate that person's constitutional right to due process? In the context of a breach of contract lawsuit, for example, personal jurisdiction exists if there is a written agreement specifying New York law applies. But even absent a written contract, a court may still be able to assert jurisdiction based on the underlying conduct of the parties prior to the lawsuit.
Does Conducting Business in New York Establish Jurisdiction?
Here is a recent example from an ongoing case before a federal judge in Manhattan. The plaintiff in this case is a Manhattan resident. The defendant is a citizen of Denmark. The plaintiff and the defendant have been business partners for many years. Over the past few years, they have met several times in Manhattan to discuss one of their business deals.
Specifically, the parties formed a Delaware-based corporation for the purpose of acquiring the stock of several other companies. A New York attorney handled the acquisition. The defendant also made numerous trips from Denmark to New York City to discuss various aspects of the deal.
At one point, the plaintiff, the defendant, and their New York attorney discussed signing a written agreement with a third party to cover one aspect of their acquisition plan. The plaintiff and the third party signed the contract, but for some reason the defendant did not. Nevertheless, the plaintiff claims he made a payment to the defendant as required by the contract, and the defendant failed to perform his reciprocal obligations. The plaintiff subsequently sued the defendant in Manhattan federal court for breach of contract.
As a preliminary matter, the defendant moved to dismiss the lawsuit on the grounds the New York court lacked jurisdiction over him. But in a September 14 decision, U.S. District Judge Lonrna G. Schofield denied the motion. Judge Schofield said the court had personal jurisdiction over the defendant, because the “[p]laintiff's claims have a substantial nexus with business that [d]efendant transacted in New York.” The “substantial nexus” test is commonly applied by courts in determining jurisdiction. Here, the court noted:
The parties routinely met in New York to discuss their business.
They retained a New York attorney to form a corporation.
The actual contract at issue was discussed at a meeting that took place in New York, was more than sufficient to create a substantial nexus between the state and the defendant's alleged breach.
Need Help With Contract Litigation?Establishing jurisdiction is only part of a successful breach of contract lawsuit. If you find yourself in a situation where you need to assert your rights under a written or oral contract, it is important you seek assistance from an experienced New York business attorney. Contact the offices of Waldhauser & Nisar, LLP, today if you would like to speak with an attorney right away.