Academic journal article Albany Law Review

Seeking Justice in the Empire State: Court of Appeals Broadens the Reach of Long Arm Jurisdiction and Clarifies the Statutory Guidelines for Application of CPLR Section 302(a)(1)

Academic journal article Albany Law Review

Seeking Justice in the Empire State: Court of Appeals Broadens the Reach of Long Arm Jurisdiction and Clarifies the Statutory Guidelines for Application of CPLR Section 302(a)(1)

Article excerpt


This article will discuss developments in long-arm jurisdiction under CPLR section 302(a)(11) and analyze the recent New York State Court of Appeals's thoughtful and instructive decision in Lied ex rel. Lied v. Lebanese Canadian Bank, SAL. (2) Lied decided the question of whether a non-domiciliary's maintenance of a bank account in New York constituted a "transaction of business" out of which the plaintiffs claims arose under the state's long-arm statute. The Lied plaintiffs had alleged that the defendant funded a terrorist organization responsible for the injuries and deaths of certain plaintiffs and decedents they represented. (3) The Lied opinion did not decide if New York had jurisdiction over the defendant but analyzed a certified question (4) from the United States Court of Appeals for the Second Circuit regarding whether there was a statutory basis for personal jurisdiction over the defendant. (5)

In Lied, the Empire State's highest court answered the Second Circuit's question in the affirmative, expansively defining the "transaction of business" clause under CPLR section 302(a)(1)(6) and extending the jurisdictional reach of the long-arm statute's "arising out of' provision. (7) The Lied opinion is a broad and pragmatic statutory interpretation of CPLR section 302(a)(1) by the Court of Appeals. It signals the court's willingness to apply the state's long-arm statute as its drafters intended, (8) clarifies prior jurisprudential entanglement of statutory and constitutional issues, (9) and is welcome news for the plaintiffs bar. (10)

A. Jurisdiction in New York

A New York State court does not have jurisdiction to render a valid, binding judgment unless it has "subject matter jurisdiction (competence to entertain a claim or claims), in personam jurisdiction (power over the person or property), and proper notice." (11) Consideration of subject matter jurisdiction and notice are not included in this article. If the defendant consents, is domiciled, incorporated, licensed to do business, or is doing business in New York, a state court may exercise personal jurisdiction over that defendant. (12) Jurisdiction over the property includes in rem and quasi-in rem jurisdiction. (13) These traditional grounds for in personam or power jurisdiction are referred to as general jurisdiction and were developed prior to the adoption of the CPLR. (14) They were incorporated into CPLR 301 by the New York legislature. (15)

Specific jurisdiction is authorized by CPLR 302. (16) It is a "single contact" long-arm statute, which permits the state's courts to restrictively assert in personam jurisdiction over non-domiciliary individuals, corporations and other entities designated by the statute that are not subject to general jurisdiction. (17) Jurisdiction under CPLR 302 is restricted by the contacts enumerated in the statute and the claims they are based on must arise out of those contacts. (18) The long-arm statute does not extend as far as is constitutionally permissible (19) and its application cannot violate the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution. (20)

In personam jurisdiction must be analyzed separately for each cause of action in the plaintiffs complaint and for each defendant, co-defendant, and third party defendant. (21) New York courts determine if in personam jurisdiction exists by using a three-step process. First, assuming the court has competence to hear a matter, the court determines whether the plaintiffs service of process upon the defendant was procedurally proper. (22) Second, the court determines whether there is a statutory basis under CPLR 301 or 302 that renders the service of process effective. (23) Third, the court determines whether the exercise of in personam jurisdiction comports with constitutional principles. (24) The New York long-arm statute does not extend to the constitutional limits established by International Shoe Co. …

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