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Deutsche Bank AG v. Vik
Factual and Procedural Background
This opinion concerns an appeal from an order of the Supreme Court, New York County, which granted defendants' motion to dismiss the complaint for lack of personal jurisdiction under CPLR 302(a)(3)(ii). The underlying dispute involves alleged tortious acts related to transfers made in 2012 and 2015, which plaintiff asserts caused injury. The court evaluated whether New York courts have jurisdiction over defendants based on these alleged acts.
Legal Issues Presented
- Whether the court has personal jurisdiction over defendants under CPLR 302(a)(3)(ii) based on alleged tortious acts committed outside New York that caused injury within New York.
- Whether asserting jurisdiction under CPLR 302(a)(3)(ii) comports with constitutional due process requirements, including the minimum contacts standard and the "effects test."
- Whether plaintiff is entitled to jurisdictional discovery to establish facts supporting the exercise of jurisdiction.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| LaMarca v Pak-Mor Mfg. Co., 95 NY2d 210 (2000) | Elements required under CPLR 302(a)(3)(ii) for personal jurisdiction based on tortious acts outside New York. | Outlined the five-part test for jurisdiction under CPLR 302(a)(3)(ii) which the court applied to the facts. |
| CRT Invs., Ltd. v BDO Seidman LLP, 85 AD3d 470 (1st Dept 2011) | Definition of situs of commercial injury as where critical events occurred, not where damages were felt. | Used to determine that injury did not occur in New York because critical events happened elsewhere. |
| Magwitch L.L.C. v Pusser's Inc., 84 AD3d 529 (1st Dept 2011), lv denied 18 NY3d 803 (2012) | Clarification of situs of injury and its relevance to jurisdiction. | Supported the conclusion that the situs of injury was outside New York. |
| Cotia [USA] Ltd. v Lynn Steel Corp, 134 AD3d 483 (1st Dept 2015) | Application of situs of injury test to dismiss jurisdiction where tortious acts and assets were outside New York. | Confirmed that injury situs was not New York, supporting dismissal of jurisdiction. |
| Deutsche Bank AG v Vik, 142 AD3d 829 (1st Dept 2016) | Prior case involving the same parties; federal caselaw cited that did not apply situs of injury test. | Distinguished from current case; prior affirmance did not resolve jurisdiction under CPLR 302(a)(3)(ii). |
| Penguin Group (USA) Inc. v American Buddha, 16 NY3d 295 (2011) | Due process requirements for personal jurisdiction, including minimum contacts and fair play. | Applied to conclude that even if CPLR 302(a)(3)(ii) elements were met, jurisdiction must comply with constitutional due process. |
| International Shoe Co. v Washington, 326 US 310 (1945) | Establishment of minimum contacts standard for personal jurisdiction. | Used to analyze whether defendants had sufficient contacts with New York. |
| World-Wide Volkswagen Corp v Woodson, 444 US 286 (1980) | Reasonable anticipation of being haled into court in the forum state as part of minimum contacts. | Supported the court’s analysis of whether defendants could foresee litigation in New York. |
| Charles Schwab Corp v Bank of Am. Corp., 883 F3d 68 (2d Cir 2018) | "Effects test" for personal jurisdiction requiring that defendant expressly aim conduct at the forum. | Applied to find that defendants did not expressly aim tortious conduct at New York, defeating jurisdiction. |
| McBride v KPMG Intl., 135 AD3d 576 (1st Dept 2016) | Standard for entitlement to jurisdictional discovery. | Held plaintiff failed to show facts might exist to support jurisdiction, denying discovery. |
Court's Reasoning and Analysis
The court began by applying the five-part test under CPLR 302(a)(3)(ii) for personal jurisdiction based on tortious acts committed outside New York. It found that the critical events giving rise to the plaintiff’s injury—the 2012 and 2015 transfers—occurred outside New York and did not involve New York assets. Consequently, the situs of injury was not New York, and economic injury felt in New York was insufficient to confer jurisdiction.
The court distinguished a prior related case that relied on federal caselaw which did not apply the situs of injury test, emphasizing that the prior decision did not resolve the jurisdictional issue under CPLR 302(a)(3)(ii).
Next, the court considered constitutional due process requirements, noting that even if jurisdictional elements were met, defendants must have minimum contacts with New York and the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice. Applying the "effects test," the court found that defendants did not expressly aim their conduct at New York, and mere foreseeability of injury in New York was insufficient to establish jurisdiction.
Finally, the court denied plaintiff’s request for jurisdictional discovery, holding that plaintiff did not demonstrate that facts might exist to support jurisdiction.
Holding and Implications
The court unanimously affirmed the order of the Supreme Court, New York County, which dismissed the complaint for lack of personal jurisdiction under CPLR 302(a)(3)(ii), without costs.
This decision directly affects the parties by upholding dismissal for lack of jurisdiction and denies plaintiff’s attempt to proceed in New York courts under the cited statute. The opinion does not establish new precedent beyond applying existing jurisdictional and due process principles.
Sweeny, J.P., Webber, Kern, Oing, JJ.
Sweeny, J.P., Webber, Kern, Oing, JJ.
Cahill Gordon & Reindel LLP, New York (Sheila C. Ramesh of counsel), for appellant.
Whiteman Breed Abbott & Morgan LLC, New York (Thomas P. O'Connor of counsel), for Erik Martin Vik, Senior and VBI Corporation, respondents.
Zaroff & Zaroff LLP, Garden City (Ira S. Zaroff of counsel), for Alexander Vik and Sebastian Holdings, Inc., respondents.
Order, Supreme Court, New York County (Anil C. Singh, J.), entered June 12, 2017, which granted defendants' motion to dismiss the complaint for lack of personal jurisdiction under CPLR 302(a)(3)(ii), unanimously affirmed, without costs.
A plaintiff relying on CPLR 302(a)(3)(ii) must show that (1) the defendant committed a tortious act outside New York; (2) the cause of action arose from that act; (3) the tortious act caused an injury to a person or property in New York; (4) the defendant expected or should reasonably have expected the act to have consequences in New York; and (5) the defendant derived substantial revenue from interstate or international commerce (LaMarca v Pak-Mor Mfg. Co., 95 NY2d 210, 214 [2000]). In New York, "the situs of commercial injury is where the original critical events associated with the action or dispute took place, not where any financial loss or damages occurred" (CRT Invs., Ltd. v BDO Seidman, LLP, 85 AD3d 470, 472 [1st Dept 2011]; see Magwitch, L.L.C. v Pusser's Inc., 84 AD3d 529, 532 [1st Dept 2011], lv denied 18 NY3d 803 [2012]).
Here, the "original critical events" giving rise to plaintiff's injury were the 2012 and 2015 Transfers. As those transfers occurred outside of New York and did not involve New York assets, the situs of injury was not in New York (see Cotia [USA] Ltd. v Lynn Steel Corp., 134 AD3d 483, 484-485 [1st Dept 2015]; Magwitch, 84 AD3d at 530-532). That plaintiff felt economic injury in New York, alone, is an insufficient basis to confer jurisdiction. To the extent plaintiff relies on Deutsche Bank, AG v Vik (2015 Slip Op 30163[U] [Sup Ct, NY County 2015]), that case relied on federal caselaw that did not apply the situs of injury test, and our decision affirming that order did not determine the issue of jurisdiction under CPLR 302(a)(3)(ii) (see 142 AD3d 829 [1st Dept 2016]).
Furthermore, even if the elements of CPLR 302(a)(3)(ii) have been met, asserting personal jurisdiction would not comport with due process (see Penguin Group [USA] Inc. v American Buddha, 16 NY3d 295, 302 [2011]). To comport with due process, "[t]here must also be proof that the out-of-state defendant has the requisite minimum contacts' with the forum state and that the prospect of defending a suit here comports with traditional notions of fair play and substantial justice,'" (id. at 307, quoting International Shoe Co. v Washington, 326 US 310, 316 (1945)]). The "minimum contacts" requirement is satisfied where "a defendant's conduct and connection with the forum State' are such that it should reasonably anticipate being haled into court there'" (LaMarca at 216, quoting World-Wide Volkswagen Corp. v Woodson, 444 US 286, 297 [1980]). Under the "effects test" theory of personal jurisdiction, where the conduct that forms the basis for the plaintiff's claims takes place entirely out of forum, and the only relevant jurisdictional contacts with the forum are the harmful effects suffered by the plaintiff, a court must inquire whether the defendant "expressly aimed" its conduct at the forum (Charles Schwab Corp. v Bank of Am. Corp., 883 F3d 68, 87 [2d Cir 2018]). Here, defendants did not expressly aim their tortious conduct at New York, and the foreseeability that the alleged fraudulent conveyances would injure plaintiff in New York is insufficient (id. at 87-88).
Plaintiff is not entitled to jursidictional discovery, as it has not demonstrated that facts may exists that could support the exercise of jurisdiction (see McBride v KPMG Intl., 135 AD3d 576, 577 [1st Dept 2016]).
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: JULY 3, 2018
CLERK
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