Black River Associates v. Newman

• Decision Date: 02 February 1996
• Citation: 218 A.D.2d 273,637 N.Y.S.2d 880
• Parties: BLACK RIVER ASSOCIATES, a New York Limited Partnership, Appellant, v. Randy NEWMAN, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 880

637 N.Y.S.2d 880

218 A.D.2d 273

BLACK RIVER ASSOCIATES, a New York Limited Partnership, Appellant, v. Randy NEWMAN, Respondent.

Supreme Court, Appellate Division Fourth Department.

Feb. 2, 1996.

Appeal from Order of Supreme Court, Onondaga County; Nicholson, Judge, Personal Jurisdiction.

Sargent, Cramer & Myers, by Richard Sargent, Syracuse, for Appellant.

Law Offices of Steven C. Hirsch, by Alberto Pola, Garden City, for Respondent.

Before DENMAN, P.J., and LAWTON, WESLEY, BALIO and DAVIS, JJ.

DENMAN, Presiding Justice:

In this action by plaintiff seeking specific performance of an agreement by defendant, a non-domiciliary, to purchase real property located in New York, we are called upon to decide whether, by entering into such agreement, defendant "transact[ed] any business" in New York (CPLR 302[a][1] ), thus subjecting himself to the exercise of "long-arm" personal jurisdiction by a New York court. We conclude that defendant thereby transacted business in New York and thus is subject to suit in New York in a manner consistent with the Due Process Clause of the Fourteenth Amendment of the United States Constitution.

Plaintiff, Black River Associates, is a New York limited partnership that maintains its principal office in Franklin Lakes, New Jersey. Defendant, Randy Newman, is a California resident. In September 1994, defendant was solicited by Marvin Bakalar, a realtor on behalf of plaintiff, which was seeking to sell real property in Liverpool, New York. The property currently serves as a post office under a long-term lease. All preliminary discussions and negotiations took place by mail, telephone, or telefax between Bakalar's office in Florida and defendant's office in California. On October 11, 1994, Bakalar telephoned defendant to advise him that plaintiff would accept his most recent offer. That same day, Bakalar faxed a letter confirming that understanding and inviting defendant to prepare a contract and send it to plaintiff at its New Jersey office.

On October 19, 1994, defendant executed a proposed contract of sale and mailed it to plaintiff's New Jersey office. On October 20, 1994, plaintiff accepted defendant's offer by executing the contract and returning it to defendant in California. The contract called for defendant to purchase the property for $715,000, subject to the lease with the U.S. Postal Service. According to the contract, time was of the essence and the closing was to occur by November 7, 1994. The contract granted either party the right to bring legal action for specific performance in the event of the another party's breach. Pursuant to paragraph "O" of the contract, the parties agreed:

"[I]n the event the Buyer or Seller herein are non-residents of the State of New York * * * then in that event each of the parties herein designates the Secretary of State of New York and appoints that Secretary of State as his duly designated Resident Agent for the purpose of accepting service for and in behalf of said Buyer or Seller, as the case may be, and * * * the terms and conditions of this Contract for Purchase and Sale shall be governed by the laws of the State of New York".

After receiving the executed contract, defendant made several telephone calls from California to Liverpool to ascertain whether the Postal Service would be renewing the lease. For reasons not disclosed by the record, defendant failed to tender the purchase price by the closing date in the contract, nor did he request an extension. Plaintiff then commenced this action, alleging breach of contract and requesting specific performance. The complaint was personally served upon defendant at his office in Beverly Hills. In lieu of answering, defendant moved to dismiss the complaint pursuant to CPLR 3211(a)(8) on the ground that the court lacked personal jurisdiction over him. In his affidavit, defendant set forth the foregoing facts and averred:

"At no time was I physically present in New York nor did I go to New York to inspect the Property. Moreover, I did not retain anyone on my behalf to inspect the Property in New York. The only communication I had with respect to the Property in New York, were [sic] several telephone calls to the United States Post Office occupying the Property to try to ascertain whether or not it would be renewing its lease for the Property. That is the only contact whatsoever I had with New York in connection with this entire transaction. Moreover, I did not have, nor ever have [sic], maintained an office, bank account, telephone listing or number, employed a salesman, solicited orders or made sales in the State of New York".

Defendant argued that negotiating the purchase of the New York property over the telephone and through the mail was insufficient to subject him to suit in New York.

In opposition, counsel for plaintiff argued that defendant's agreement to purchase New York real property subjected defendant to long-arm jurisdiction under CPLR 302(a)(1).

Supreme Court granted defendant's motion to dismiss the complaint for lack of personal jurisdiction. Plaintiff appeals, arguing that defendant, having contracted to purchase New York realty, is subject to suit in New York under CPLR 302(a)(1), which, inter alia, permits long-arm jurisdiction over a non-domiciliary who "transacts any business within the state." Plaintiff's argument raises an issue of apparent first impression, as there is no New York case ¹ directly on point. Moreover, there is only one tangential reference to the issue in a New York commentary (see, Siegel, N.Y.Prac. § 103, at 157 [2d ed.], which observes that a non-domiciliary's contract to buy New York land "may qualify as a transaction of New York business and thereby face personam jurisdiction under CPLR 302(a)(1)". Professor Siegel cites no cases in support of that assertion. Thus, in determining whether New York may constitutionally assert jurisdiction over defendant, we shall examine the scope of the long-arm statute in light of its history and purpose.

Generally, prior to 1945, either the residence of a defendant within the state or personal service upon a defendant within the state was required before a court could constitutionally exercise personal jurisdiction over him (see generally, Milliken v. Meyer, 311 U.S. 457, 61 S.Ct. 339, 85 L.Ed. 278, reh. denied 312 U.S. 712, 61 S.Ct. 548, 85 L.Ed. 1143; Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565). In the landmark case of International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95), the Supreme Court held that due process permits a state to exercise personal jurisdiction over a non-resident defendant served without the state provided that there are certain "minimum contacts" between defendant and the forum state and provided that the claim arises out of those contacts. The Supreme Court held, "[T]he privilege of conducting activities within a state * * * may give rise to obligations, and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires [a party] to respond to a suit brought to enforce them can, in most instances, hardly be said to" violate due process (International Shoe Co. v. Washington, supra, at 319, 66 S.Ct. at 160). The Court stated:

"Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure" (International Shoe Co. v. Washington, supra, at 319, 66 S.Ct. at 160).

Generally, a party subjects itself to long-arm jurisdiction consistent with " 'traditional notions of fair play and substantial justice' " (International Shoe Co. v. Washington, supra, at 316, 66 S.Ct. at 158) when it "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws" (Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283, reh. denied 358 U.S. 858, 79 S.Ct. 10, 3 L.Ed.2d 92; see, Asahi Metal Indus. Co. v. Superior Ct., 480 U.S. 102, 109, 107 S.Ct. 1026, 1030, 94 L.Ed.2d 92; Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490), or when it engages in purposeful activities directed at the forum state (Burger King Corp. v. Rudzewicz, supra, at 475-476, 105 S.Ct. at 2183-2184). One rationale for the "minimum contacts" standard is to prevent the individual states from overreaching the judicial limits appropriate to "their status as coequal sovereigns" (World-Wide Volkswagen Corp. v. Woodson, supra, at 292, 100 S.Ct. at 564). Thus, it is appropriate to analyze, in light of the contacts between the defendant, the claim, and the forum, the plaintiff's interest in obtaining relief, the interest of the forum state in asserting jurisdiction over the defendant in relation to the potential interests of other states in taking cognizance of the claim, and the shared interest of the several states in our federal system in furthering their substantive social and economic policies and obtaining the most efficient resolution of controversies (see, Asahi Metal Indus. Co. v. Superior Ct., supra, at 113, 115, 107 S.Ct. at 1030; Burger King Corp. v. Rudzewicz, supra, at 476-477, 105 S.Ct. at 2184; Keeton v. Hustler Magazine, 465 U.S. 770, 775-778, 104 S.Ct. 1473, 1478-1480, 79 L.Ed.2d 790; World-Wide Volkswagen Corp. v. Woodson, supra, at 292-294, 100 S.Ct. at 564-565).

Another rationale for the "minimum contacts" standard is to protect a defendant from having to litigate in or be bound by the judgments of a distant or inconvenient "forum with which he has established no meaningful 'contacts, ties, or relations' " (Burger King Corp. v. Rudzewicz, supra, at 471-472, 105 S.Ct. at 2181, quoting International Shoe Co. v. Washington, supra, at...