On July 5, 2017, the Superior Court of New Jersey, Appellate Division, ruled in favor of our client WolfBlock LLP in the matter of Dutch Run-Mays Draft V. Wolf Block, making it the first published case in a New Jersey court to apply the U.S. Supreme Court’s latest rulings on personal jurisdiction.
In 2004, Dutch Run, a West Virginia limited liability company having its place of business in Deerfield Beach, Florida, retained Pennsylvania attorney, Henry Miller, a partner with the law firm of WolfBlock LLP, a Pennsylvania limited liability partnership, in connection with Dutch Run’s acquisition of 5,000 acres of property in West Virginia. In March 2009, WolfBlock’s partners voted to dissolve the partnership, and all of its activities as a law firm ceased. At that time, WolfBlock shuttered all of its offices and its attorneys and staff were dismissed. Since that time, WolfBlock has been winding down its affairs. In 2014, Dutch Run filed suit against WolfBlock in the New Jersey Superior Court, Law Division, for legal malpractice arising out of its representation of Dutch Run in 2004. In this regard, Dutch Run claimed that there were title defects that rendered the West Virginia property unfit for residential development.
WolfBlock moved to dismiss the complaint for lack of personal jurisdiction. WolfBlock argued that the complaint failed to allege any facts giving rise to specific jurisdiction in New Jersey, because the alleged malpractice and the resulting harm did not arise out of, and was not connected with, any activities within the State of New Jersey. WolfBlock also argued that the New Jersey Court could not assert general jurisdiction over it because it did not maintain continuous and systematic contacts sufficient to render it “at home” in New Jersey, the standard for general jurisdiction articulated by the United States Supreme Court in Daimler AG v. Bauman, 134 S. Ct. 746 (2014). The United States Supreme Court in Daimler rejected the test previously used in determining whether courts may assert general personal jurisdiction over non-resident defendants, wherein jurisdiction could be asserted where the defendant engaged in substantial, continuous, and systematic activities aimed at or in the forum state. The Daimler decision adopted the view expressed in Goodyear Dunlop Tire Operations, S.A. v. Brown, 131 S. Ct. 2846 (2011), which held that “the paradigm forum for the exercise of general jurisdiction. . .for a corporation, . . .(is) one in which the corporation is fairly regarded as at home.” Under Daimler, “at home” for a corporation was construed to mean the forum where the entity is incorporated or maintains its principal place of business. 134 S. Ct. at 760. The principles articulated in Daimler were most recently reaffirmed by the United States Supreme Court in BNSF Ry. Co. v. Tyrell, 137 S. Ct. 1549 (2017) and Bristol-Myers Squibb Co. v. Superior Court of Calif., __S. Ct. __ (June 19, 2017).
In the WolfBlock case, it was undisputed that the law firm was neither a New Jersey partnership nor did it maintain its principal place of business in New Jersey. Although WolfBlock maintained offices in multiple states while it was conducting operations as a law firm, including in New Jersey, by the time Dutch Run brought suit against WolfBlock, the law firm had been in dissolution for over five years.
The issue that Dutch Run emphasized in its appeal was that WolfBlock had “consented” to jurisdiction in New Jersey at the time it brought suit because WolfBlock maintained a registered agent for service of process, and was registered to do business in New Jersey. The Appellate Division rejected this argument on the basis of the decision in Daimler. WolfBlock argued, and the Appellate Division agreed, that its continued business registration and maintenance of a registered agent does not confer general jurisdiction on WolfBlock because it “neither conducted continuous nor systematic business in New Jersey and was not at home in the state.” 2017 WL 2854420, p. 5. While some states’ business registration statutes contain language directly addressing consent to jurisdiction, the New Jersey statute requiring a foreign corporation to obtain a certificate of authority to transact business in New Jersey and to maintain a registered agent, do not expressly direct consent to general jurisdiction. “On this issue, we adopt the view concluding the use of a registered agent is more likely a means of facilitating service of process for actions where jurisdiction properly relates to minimum contacts or specific actions in the forum.” Id. Quoting Judge Learned Hand, the New Jersey Appellate Division disagreed that business registration amounts to consent to general jurisdiction in the forum because adoption of such a principle would place ‘an outlaw who refused to obey the laws of the state in better position than a corporation which chooses to conform.” Id., quoting Smolik v. Phila. & Reading Coal & Iron Co., 222 F. 148, 150 (S.D.N.Y. 1915). In addition, the Appellate Division concluded that any argument that an entity’s business registration establishes general jurisdiction is belied by the decision in Daimler, which established a clear, narrow interpretation of general jurisdiction. This interpretation is not met by mere business registration in New Jersey.
Finally, the Appellate Division held that general jurisdiction was defeated on more simple grounds in the Dutch Run case. In this regard, while WolfBlock may once have had offices in New Jersey and conducted significant business here, “at the time plaintiff’s complaint was filed, defendant was well on its way to complete dissolution and was not conducting business in New Jersey or anywhere else. See, Mortg. Grader, Inc. v. Ward & Olivo, L.L.P., 225 N. J. 423,437 (2016). Thus, based on the evolved interpretation of general jurisdiction under the due process clause, the Appellate Division affirmed the trial court’s dismissal of Dutch Run’s complaint against WolfBlock because WolfBlock was not at home in New Jersey and did not consent to jurisdiction here.
For more information on this precedential opinion, please click here.