The World in U.S. Courts: Winter 2015 - Personal Jurisdiction | November.04.2014
Plaintiff Art Assure is a limited liability company that finances purchases of valuable artwork. It is incorporated in Delaware and maintains its principal place of business in New York. Defendant Artmentum, a seller of such artwork, is a Swiss corporation operating in Switzerland. Art Assure and Artmentum entered into negotiations concerning Art Assure’s prospective purchase, with Artmentum’s involvement, of a collection of nineteenth and twentieth century artwork then owned by a Japanese bank. Art Assure and Artmentum executed a Memorandum of Understanding (“MOU”) to govern the terms of the sale. The MOU contained a place of jurisdiction clause that required disputes under or relating to the MOU to be resolved by arbitration in Switzerland. Negotiations between the parties soon fell apart. Art Assure then sued Artmentum, claiming that the latter’s fraudulent misrepresentations inducing Art Assure to expend considerable resources to research the transaction, to obtain potential financing for the transaction, and to research the collection. Defendants moved to dismiss the Complaint for lack of personal jurisdiction.
The Court found that it had no jurisdiction over Defendants under New York’s long-arm statute because they did not transact business in New York or contract to supply goods or services in New York, the two statutory requirements. As the Court recapped: the Complaint did not allege any ongoing relationship between Plaintiff and Defendants, nor that Defendants negotiated or executed the MOU in New York; the choice of law and choice of forum clauses in the MOU designated Switzerland; the due diligence was to take place in Japan; the goods were to be shipped from Japan to Switzerland; and the closing was to take place in Switzerland. The Court also rejected Art Assure’s argument that its own status as a New York domiciliary and its own conduct in New York, and that the parties’ transatlantic negotiations, were relevant to personal jurisdiction over Artmentum. The Court noted that that, while Artmentum maintained websites, they merely highlighted Defendants’ representations that they serve clients globally and that this was an inadequate basis for jurisdiction, even if some sales were made in New York.
The Court also found that Art Assure failed to establish jurisdiction under the alternative means of showing that Artmentum’s allegedly tortious acts caused an injury to a person or property in New York, noting that the “injury in New York” prong is not satisfied by remote or consequential injuries which occur in New York only because the plaintiff is domiciled, incorporated or doing business in the state. In the Court’s view, none of the critical events took place in New York, and the only connections with New York stemmed from Plaintiff’s domicile.