District Court Finds No Personal Jurisdiction over Alleged Indemnitors Where Contract of Indemnification Was Neither Negotiated Nor Signed in New York and Required No Payments or Other Actions In New York

The World in U.S. Courts: Spring 2016 - Personal Jurisdiction/Foreign Sovereign Immunities Act (FSIA)/Forum Non Conveniens | February.25.2016

Yukos Capital S.A.R.L. v. Feldman, U.S. District Court for the Southern District of New York, February 25, 2016

Daniel Caleb Feldman, a resident of New York State, was sued in an action, and responded by seeking to bring into the case third parties that he claimed were obligated to indemnify him: Financial Performance, Holdings B.V. ("FPV"), a Dutch company, and Directors Protection Ltd. ("DPL"), a UK company. FPV and DPL moved to dismiss the third party complaint for lack of personal jurisdiction.

The Court held that Feldman's pleadings alleged no facts that would support a conclusion that either FPV or DPL had been "doing business" in New York, and thus there was no basis for the assertion of general personal jurisdiction over them under New York law. The Court also found that Feldman's complaint alleged no facts to support a finding of specific personal jurisdiction under New York's long-arm statute. Feldman had argued that FPV and DPL were subject to personal jurisdiction because the event that triggered their alleged duty to indemnify him occurred in New York. That argument, the Court said, had been long-rejected under New York case law. The Court further held that the mere fact that Feldman was a citizen and resident of New York did not render the alleged contract of indemnification he was suing upon an agreement to "supply goods or services in New York." That contract was neither negotiated nor signed in New York, and it required no payments to be made in New York. The Court concluded that an agreement to indemnify, "wherever entered into and whatever the residence of the indemnitee," could not be considered a contract for services within the forum without some specific reference to payments or other actions under the contract being required to be made or taken in New York.

The court also rejected Feldman's argument that personal jurisdiction could be based on his having served a copy of the complaint on a director of FPV and DPL while the director was in New York. Feldman's reliance on "'tag' service of a director of a foreign entity not otherwise subject to personal jurisdiction in New York…rests on a misguided conflation of the sufficiency of service of process with the existence of personal jurisdiction."

The Court dismissed FPV and DPL from the suit, but allowed Feldman a chance to replead his indemnification claim.

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