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Agent’s Negotiation Of a Contract in NY Gives NY Courts Long Arm Jurisdiction

August 11, 2009

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In the case of <i>Owens v. Freeman</i>, plaintiffs commenced an action in New York for breach of contract against defendant, last known to be a New Jersey resident. Plaintiffs were unable to serve the summons and complaint until 130 days after commencement, when process was served pursuant to CPLR 308(2) at defendant’s last known address in New Jersey. A month later, after defendants failed to appear in the action, plaintiffs moved for and were granted a nunc pro tunc extension of time for service, thus making service of process on defendant timely. Plaintiffs then moved for a default judgment that the court granted. Two months later, defendant moved to vacate the default judgment pursuant to CPLR 317 and 5015(a) (1) and (4), stating that he was not subject to the court’s jurisdiction and that he had a meritorious defense. The Supreme Court denied defendant’s motion. He appealed to the Third Department.
The Third Department held that defendant’s contention that the court lacked jurisdiction to enter a default against him was without merit. Defendant argued that the court erred in granting the plaintiffs an extension of time for service. The court noted that defendant did not move to vacate the extension of time, nor did he request leave to appeal. Further, the court stated that defendant did not allege either that plaintiff lacked good cause for the delay and/or that defendant was prejudiced by the delay in service of process.
Defendant next argued that he was not subject to the court’s jurisdiction under New York’s long-arm statute. The Third Department disagreed. Citing CPLR 302(a)(1) the court noted that personal jurisdiction may be obtained over a nondomiciliary “who in person, or through an agent…transacts any business within the state or contracts anywhere to supply goods or services in the state.” The court held that because defendant’s agent negotiated the material terms of the contract with plaintiff in New York, defendant was subject to the state’s jurisdiction under the long-arm statute.
Finally, the Third Department held that an uncorroborated denial that service of process was completed was insufficient to dispute the process server’s affidavit that service had been completed on defendant’s wife. Because defendant offered no other excuse for his default, the Third Department found that his arguments lacked merit, and thus affirmed trial court’s entry of default.
<b>Thanks to Alison Weintraub for her contributions to this post! </b>
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