Comments on Recent Cases: February 2022
Part of my work involves reading court decisions to keep abreast of how judges decide the types of cases I handle. Below, I share some thoughts on recent decisions.
Court Extends Personal Jurisdiction Based On Apartment Lease
A defendant may ask a court to dismiss a litigation by arguing that it is not subject to personal jurisdiction in that court. For example, a California resident may argue that a New York court has no jurisdiction over her. But every state has “long-arm” jurisdiction laws that enable courts, in certain circumstances, to assert personal jurisdiction over out-of-state residents.
One key basis for “long-arm” jurisdiction is the ownership or use of real estate in the jurisdiction. For example, in a recent decision, the state appellate court in Manhattan affirmed the extension of jurisdiction in a personal injury case over California residents who were in Florida at the time of accident. In that case, the plaintiff alleged a lounge chair fell from an apartment balcony in New York and hit her. The court extended jurisdiction over the defendants because, among other reasons, they were tenants of the New York apartment.
Cases like this illustrate how out-of-state residents may subject themselves to personal jurisdiction by owning or leasing real estate in another state.
Court Illustrates High Burden in Fraud Cases
Many business disputes arise from a defendant making a false statement to a plaintiff. When the plaintiff learns the truth, often to her detriment, she may choose to sue the defendant for fraud. But a false statement alone may not be enough to win in litigation.
In a recent decision, the state appellate court in Manhattan affirmed the dismissal of a fraud claim brought against the seller of a business. The buyer claimed the seller misled her about the terms of leases the business had. But the court held that, even if that were true, the buyer could have read the leases herself and learned the truth. Since she could have learned the truth on her own, her fraud claim for the lie was doomed to fail.
Cases like this illustrate a key burden plaintiffs have in fraud cases.
Court Limits Exercise of Personal Jurisdiction
Courts will dismiss litigation over out-of-state defendants where there is an insufficient connection between the state and the claims. Even if a defendant does business in the same state as the court, that alone may be insufficient to confer personal jurisdiction.
This principle was illustrated in a recent decision by the state appellate court in Manhattan. In that case, the defendant was from out-of-state, but had numerous connections to New York: it negotiated an agreement with a New York company, retained New York professionals, and agreed to litigate in New York in several agreements. But the specific claims at issue in the case arose from statements the defendant made in Illinois. As a result, the court held that it did not have jurisdiction over the defendant and affirmed dismissal of the case.
This case illustrates what a plaintiff needs to show to establish personal jurisdiction over an out-of-state defendant in a case arising from false statements. General connections to New York, and even a related transaction, may not be enough.
Court Punishes Unruly Behavior in Virtual Hearing
Over the past two years, many litigation proceedings have taken place over the phone or by video. And some litigants have treated their court appearances like angry phone calls instead of respectful appearances before a judge. Not only do courts treat litigants harshly when this happens, but the litigants may have a hard time appealing the resuling adverse decisions.
A recent decision by the state appellate court in Brooklyn illustrates this issue. In that case, a litigant engaged in “disruptive behavior” in the trial court and was removed from the “virtual courtroom.” The court considered him to be in “default,” as if he did not appear at all, and ruled adversely to him without his input in the case. The appeals court affirmed the trial court and held that, since the litigant was in default, he was not entitled to an appeal according to the statute that determines who may maintain an appeal.
Cases like this reflect how important it is to be respectful in hearings, even if they are virtual or telephonic.
Court Considers Enforcement of Unsigned Agreement
Many agreements are governed by the statute of frauds, a legal doctrine that requires certain agreements to be in writing. But a signed contract is not the only kind of agreement that satisfies this rule.
For example, in a recent decision, the state appellate court in Manhattan held that draft unsigned agreements, together with emails, could possibly satisfy the rule. In doing so, it refused to grant a judgment without trial to a plaintiff who sought to collect rent from a tenant by arguing that an unsigned amendment that reduced the rent was invalid. The court noted that the parties had agreed in their communications to all of the material terms of the amendment, which suggested the signatures were an unnecessary formality.
Cases like this illustrate how parties in litigation can enter into binding amendments to their contracts, even without signing a document.