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New York Appellate Court Decides Case Based on Long Arm Statute

The accused is an Aviation and Electronic School that provides off-site educational courses in the fields of aviation, electronics, telecommunications and computers. The Aviation School has offices in California and is organized under the laws of California. The Aviation School was served with process in California. An affidavit issued by the Aviation School’s President and CEO states it has only limited contacts with the complainant, a New York Corporation and is a competitor of the accused in providing aviation and electronics continuing education programs. The Aviation School is not a part of any contract with the New York Corporation. However, the New York Corporation claims that the Aviation School conducts classes in New York.

A New York Injury Lawyer said that the secretary for the Aviation School was part of the summons and acts as an individual accused and she denies any connections with the New York Corporation in her affidavit. Another individual defendant, the Aviation School’s sales and accreditation representative claim in his affidavit that he has no affiliation with the New York Corporation other than a personal visit in 1995. The president and CEO of the Aviation School also claim no connection to New York beyond occasional personal visits.

As the party asserting jurisdiction, the complainant bears the burden of establishing the existence of personal jurisdiction as evidence.

The accused urge a standard wherein the complainant must make a legitimate complaint showing that personal jurisdiction exists. In the context of law, a motion to dismiss does not require the complainant to make a legitimate objection showing of jurisdiction. Such requirement could impose unjustifiable obstacles for a complainant, particularly for the one seeking to confer jurisdiction under the long arm statute because the jurisdictional issue is likely to be difficult. In order to defeat a dismissal motion, a complainant need only demonstrate that jurisdictional facts could exist and that it is entitled to the disclosure expressly sanctioned by the law. In determining whether the complainant has carried the minimal burden, the Court must view the jurisdictional allegations in the pleadings and supporting affidavits in the light most favorable to the complainant and resolve all doubts in its favor.

A Manhattan Personal Injury Lawyer said that based on records, the Aviation School made a pre-answer motion to dismiss the action. The complainant must demonstrate that jurisdictional facts sufficient to confer personal jurisdiction on the Aviation School may exist in order to defeat the Aviation School’s motion to dismiss.

To determine whether a non-resident may be sued in New York, the court must first determine whether the New York long-arm statute confers jurisdiction over the non-resident in light of its contacts with the state. If the Aviation School’s relationship with the New York Corporation falls under the reach of the law, the court must determine whether the exercise of jurisdiction comports with constitutional due process.

A Bronx Personal Injury Lawyer said that in the complaint, the New York Corporation bases jurisdiction on the law without specifying the subsection on which it relies. In the complainant Counsel’s Affirmation in Opposition to the motion to dismiss, the New York Corporation clarifies its basis of jurisdiction, the New York long-arm statute that provides for personal jurisdiction over non-residents who commit wrongful acts outside New York that cause injury within New York. The law confers jurisdiction on non-residents only when the accused committed a wrongful act outside the State, when the cause of action arises from that tortious act outside the State, when the act caused personal injury or property injury within the State, when the accused expected or should reasonably have expected the act to have consequences in the State and when the accused derived substantial revenue from interstate or international commerce.

The complaint pleads that the Aviation School is a California entity. Thus, in order to establish personal jurisdiction, the New York Corporation must show that the Aviation School’s commission of a tort outside New York. The New York Corporation must also show that their claim of unfair business practices arises from Aviation School’s tortious act. It must also be shown that a financial injury was caused to the New York Corporation. The New York Corporation must also show that the Aviation School should reasonably have foreseen the consequences and that the Aviation School derives substantial revenue from interstate commerce.

The Aviation School argues in their motion to dismiss that the New York Corporation has failed to allege an out-of-state wrongdoing. For the purposes of the discussion of personal jurisdiction, the Court will assume that the complainant has properly alleged an offense by the accused as well as the individual accused.

The New York long-arm statute expressly provides that there must be a causal connection between the cause of action and the alleged wrongful act. In order to justify compelling a non-resident into court in New York, where it does not have a systematic course of doing business that would subject the accused to traditional personal jurisdiction and there must exist some articulable connection between the business transacted and the cause of action sued upon.

The complaint alleges three tortious acts by the accused. It alleges that the Aviation School provided false information about the New York Corporation’s operations to educational officers at military bases and to current students and the Aviation School harassed educational partners. The complaint also alleges that the individual accused physically and verbally harassed the complainant’s students and instructors at a training location in California and the accused instituted frivolous ligation against the complainant in California.

In opposition to the motion to dismiss, the New York Corporation also alleges the Aviation School’s wrongful actions that caused them to lose substantial sums of money from all classes conducted throughout the U.S. Due to the Aviation School representative’s conduct in spreading false statements, the complainant lost almost all of its students and conducts virtually no classes in New York. At the oral argument, the counsel for the complainant added the allegation that the accused contacted the employees and the office in charge of additional education and falsely claimed that the complainant was not a licensed provider. The New York Corporation does not specify where the offices are located, the nature of the complainant’s contracts with the office in charge of addition education or the site of the Aviation School’s alleged contacts with the office in charge of additional education.

While the alleged acts outside of New York do not have an obvious contributory connection to the claimed loss of customers’ injury and business cessation injury in New York, the court is obligated to take the allegations as true and draw all reasonable inferences in favor of the complainant. It is reasonable to conclude that if the accused wrongfully interfered with the complainant’s business contracts or customers in particular and the contract was with a large interstate corporation that likely has offices in New York then the loss of customers and cancellation of classes in New York could have resulted from the interference elsewhere.

The New York Corporation argues that the Aviation School’s allegedly wrongful acts which took place in California, West Virginia and Missouri caused them economic harm through loss of customers and cancellation of classes in New York, its state of incorporation. However, a financial loss occurring in the state where the harmed party is incorporated does not by itself meet the financial injury within the state requirement. For a financial loss to rise to the level of financial injury within the state, the loss must occur in New York as a result of something other than the complainant’s mere incorporation in the said State.

However, economic injury has been found to be a sufficient basis for jurisdiction where the complainant conducts its business in New York and the injury stems from the threatened loss of important New York customers. The complaint alleges no direct interference by the Aviation School with the complainant’s customers or business in New York. However, an affirmation submitted by the New York Corporation’s counsel in opposition to the accused’s motion to dismiss belatedly adds that the accused alleged provision of false information to proposed students and educational partners caused the complainant to lose substantial sums of money from all classes conducted through the U.S. and cessation of the complainant’s New York classes. The New York Corporation also alleges in its opposition that the Aviation School conducted classes in New York in 2006 and 2009.

Whether the Aviation School had a reasonable expectation of consequences resulting from its actions in New York is determined not by looking at the specific event that led to the injury within the state, but, rather, by determining whether the accused could have foreseen consequences in the forum generally. Therefore, it is not necessary to determine if the Aviation School representative’s alleged actions in California, West Virginia and Missouri gave rise to foreseeability of injury in New York. Instead, if the accused does indeed conduct classes in New York as discussed then it should reasonably expect consequences from its connection with the forum state. In addition, if the accused has solicited the New York Corporation’s customers in New York as discussed then it is reasonable for the accused to foresee that injury to the complainant would occur in New York.

In its complaint, the New York Corporation fails to allege any facts showing that the Aviation School or the individual accused derive substantial revenue from interstate commerce. The complainant does attach a record of new instructors certified by the accused in 2006 and 2008 to its Affirmation in Opposition. An inference can be drawn that the accused derive substantial revenue from interstate commerce because the Aviation School certified new instructors in seven different states in those two time periods. While it is not a conclusive evidence that the accused earned substantial revenue from interstate commerce, for the purposes of the motion to dismiss, the court finds sufficient showing that such facts may exist to establish the requirement.

The court ordered that the Aviation School and its representatives’ motion to dismiss New York Corporation’s Amended Verified Complaint are granted for lack of personal jurisdiction.

Each of the individual’s accused claim they have limited or no connection to the State of New York. With respect to the Aviation School’s representatives, the complaint, the affirmation in opposition and the oral argument offer no allegations that any of the individuals caused injury to the state. The complaint also offers that they had no reasonable expectation of consequences in New York and they did not earn substantial revenue from interstate commerce. The complainant has failed to establish a basis on which to find long-arm jurisdiction upon the individuals’ accused. Since no other source of jurisdiction is alleged as to each, the motion to dismiss as to the individuals’ accused is granted.

The court ordered that the Aviation School and its representatives’ motion to dismiss the complainant’s Amended Verified Complaint are granted as against the accused for the complainant’s failure to state a cause of action. New York Corporation is granted leave to file and serve a second amended complaint within thirty days after service of a copy of the order with notice of entry. The amended complaint must include allegations sufficient to meet every element of at least one specified cause of action.

Businesses rely on good reputation. We make good business when people trust that we can deliver. Being a victim of wrongful accusation makes us fragile for property injury and financial injury. Whether you have been a victim of bad business dealings, premises liability or product liability, speak to Stephen Bilkis and Associates for advice and a free consultation.

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