Member of Syndicate That Loaned Money for New York Real-Estate Project Subject to Personal Jurisdiction in New York

On June 14, 2023, Justice Barry R. Ostrager of the New York County Commercial Division issued a decision in MREF REIT Lender 2 LLC v. FPG Maiden Holdings, LLC, 2023 NY Slip Op 32001(U), denying a defendant Israeli banking corporation's motion to dismiss for lack of personal jurisdiction because the defendant was a member of a lending syndicate for a loan related to a real-estate project in lower Manhattan, explaining:

Here, the Participation Agreement laid the foundation for a continuing relationship between BLITA and its NY-based subsidiary Bank Leumi [*8] USA regarding the One Seaport property in New York that has lasted for the better part of a decade, and the two plaintiffs here are suing both of those parties and others in connection with plaintiffs' additional financing for that same Project. As a result of the Participation Agreement, (i) BLITA received the benefit of the funds that Amity Lender was allegedly defrauded into lending and that are the subject of the Amity Lender's claim for unjust enrichment (the Tenth Cause of Action) and (ii) BLITA is involved in the Lender Liability Action that is the subject of the Amity Lender's declaratory [**6] judgment claim that the Amity Lender has the right to receive any monies the Borrower may recover in the Borrower Action (the Sixteenth Cause of Action).

Thus, there is a substantial relationship between BLITA's New York-related business transaction and the Senior Mezzanine Lender and the Amity Lender's claims in this action. Such jurisdiction will not violate due process. As the Court of Appeals has held: "Jurisdiction will be upheld where the defendant purposefully reaches beyond their State into another .... " State of New York v Vayu, Inc., 39 NY3d 330, 331, 186 N.Y.S.3d 93, 206 N.E.3d 1236 (2023). Here, BLITA's involvement with the Senior Seaport Loan, the Participation Agreement, [*9] the Seaport Mezzanine Loan, the Amity Loan, and the One Seaport Project as a whole are sufficient to establish the minimum contacts needed to satisfy due process.

The attorneys at Schlam Stone & Dolan regularly litigate personal-jurisdiction issues. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions related to making or opposing a motion to dismiss for lack of personal jurisdiction.