Case Against New Jersey Defendants Dismissed for Lack of Personal Jurisdiction

On February 18, 2014, the First Department issued a decision in SunLight General Capital LLC v. CJS Investments Inc., 2014 NY Slip Op. 01118, affirming a dismissal for lack of personal jurisdiction.

In SunLight General Capital, the defendants, "CJS" and "Clean Solar," were "New Jersey entities, with offices and employees located solely within the State of New Jersey, and whose alleged actions herein occurred with the State of New Jersey." The trial court dismissed the plaintiff's claims for lack of personal jurisdiction. The First Department affirmed, explaining:

The contractual claims, as against CJS, arise out of CJS's entry into a memorandum of understanding (MOU) with plaintiff which contemplated a joint venture whose business was to consist of the development of solar energy facilities on New Jersey properties owned by CJS. All of the meetings between plaintiff and CJS took place in New Jersey, and the MOU contained a New Jersey choice-of-law provision.

The fact that CJS negotiated the terms of the MOU and communicated with plaintiff via email and telephone, which communications do not serve as the basis for plaintiff's claims, is insufficient to constitute the transaction of business within New York. Plaintiff's actions within New York, including making presentations to potential investors and executing the MOU, cannot be imputed to CJS for jurisdictional purposes. Accordingly, plaintiff's breach of contract and breach of duty of fair dealing claims were properly dismissed as against CJS.

Likewise, dismissal of the tortious interference claims asserted against CJS and Clean Solar was proper. Plaintiff cannot establish personal jurisdiction, pursuant to CPLR 302(a)(3)(ii), in the absence of evidence that these defendants derive substantial revenue from interstate or international commerce.

(Internal quotations and citations omitted).

Commercial litigation in New York County routinely involves parties from all over the world. This decision reminds us that plaintiffs bear the burden of establishing that the court has jurisdiction over the defendants even when they are located just across the Hudson, in New Jersey.