128 A.D.3d 176
N.Y. App. Div.2015Background
- In the late 1990s plaintiff (a former Citibank employee) and defendant Dantas helped form a Cayman Islands private equity Fund (Opportunity Equity Partners, L.P.) and related entities to invest in privatizations in Brazil.
- Three operative agreements (an operating agreement, a limited partnership agreement, and a shareholders’ agreement governing the general partner OEP) were drafted by Citibank’s New York lawyers and were executed simultaneously in New York in December 1997.
- Plaintiff alleges he was promised 5% of OEP’s carried interest, that defendants represented he would receive that share as part of a 2008 settlement between Citibank and the Opportunity defendants, but defendants refused to pay him or to disclose the settlement terms.
- Plaintiff sued; Citibank defendants were dismissed in federal court and the remaining claims against the Opportunity defendants were remanded to New York Supreme Court, which dismissed for lack of personal jurisdiction.
- On appeal the court held CPLR 302(a)(1) personal jurisdiction exists because defendants purposefully transacted business in New York (negotiating/executing the agreements and forming a long-term business relationship) and plaintiff’s claims arise from that transaction; several causes of action (third, fifth, ninth) were nonetheless dismissed on other grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NY courts can exercise personal jurisdiction under CPLR 302(a)(1) | Contacts in New York (negotiation/execution of agreements by Citibank lawyers and plaintiff’s negotiations there) mean defendants transacted business here and claims arise from that transaction | Agreements were not negotiated in NY; mere execution or incidental contacts insufficient; plaintiff’s claims arise solely from the shareholders’ agreement (not negotiated in NY) | Yes. Personal jurisdiction exists: defendants purposefully availed themselves by negotiating/executing contracts in NY and creating a continuing business relationship; plaintiff’s claims bear an articulable nexus to that overall transaction. |
| Whether due process permits jurisdiction | Due process satisfied because defendants reasonably should expect to defend in NY given purposeful contacts and long-term relationship | Asserting jurisdiction would offend due process because contacts are insufficient and forum selection/choice-of-law point away from NY | Due process satisfied: minimum contacts, purposeful availment, and reasonable expectation to defend in NY. |
| Whether forum non conveniens dismissal is required | NY is appropriate; parties and witnesses tied to NY; hardship of no jury in foreign fora favors NY | Brazil/Cayman Islands are more suitable; Cayman choice-of-law and foreign connections weigh for dismissal | Defendants failed to meet heavy burden for forum non conveniens; NY is proper forum. |
| Whether particular causes of action should survive even if jurisdiction exists | Claims for breach of contract, fiduciary duties, and related relief should proceed | Third (tortious interference), fifth (civil conspiracy), and ninth (declaratory judgment) causes are defective | First, second, fourth, sixth–eighth causes reinstated; third (tortious interference), fifth (conspiracy), and ninth (declaratory judgment) dismissed. |
Key Cases Cited
- Deutsche Bank Sec., Inc. v. Montana Bd. of Invs., 7 N.Y.3d 65 (N.Y. 2006) (single-act long-arm jurisdiction: one purposeful NY transaction can suffice)
- Licci v. Lebanese Canadian Bank, SAL, 20 N.Y.3d 327 (N.Y. 2012) (arising-from prong is permissive; requires articulable nexus between claim and NY contacts)
- International Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (minimum contacts due process standard)
- George Reiner & Co. v. Schwartz, 41 N.Y.2d 648 (N.Y. 1977) (purposeful availment and quality/nature of contacts analysis)
- Presidential Realty Corp. v. Michael Sq. W., 44 N.Y.2d 672 (N.Y. 1978) (single NY business meeting may supply minimum contacts)
- Longines-Wittnauer Watch Co. v. Barnes & Reinecke, 15 N.Y.2d 443 (N.Y. 1965) (preliminary or subsequent acts in NY related to a contract can support jurisdiction)