Fraudulent Conduct Must be Committed by Defendant Physically in New York To Confer Jurisdiction Over Nondomiciliary

Businesses and individuals located in the State of New York who are defrauded by those located entirely outside New York may not have the right to sue those wrongdoers in any of the state or federal courts sitting in New York. Counsel for the putative plaintiff seeking to sue in New York must carefully analyze the critical facts and strategically structure the legal arguments in order to support personal jurisdiction over the fraudsters. Conversely, defendants who have no presence in New York have available arguments to avoid being haled into New York to defend against the claims.

A recent decision of the New York Appellate Division, First Department, has ruled definitively that allegedly fraudulent electronic communications transmitted outside New York to a New York company are insufficient to trigger jurisdiction in New York of a fraud action against the accused wrongdoers (albeit under one claimed section of the procedural law (CPLR 302(a)(2))): SOS Capital v Recycling Paper Partners of PA, LLC, 2023 NY Slip Op 04480 (1^st Dep’t Decided Aug. 31, 2023). While the decision applied one subsection of CPLR 302 narrowly, the Court did not address another potentially-available subsection because it found that the plaintiff’s attorney did not pursue that basis of jurisdiction.

Read the full blog post here.