Halley v. Myatt, Superior Court of New Jersey, Appellate Division, May 3, 2010
Facts: Plaintiffs retained a New York attorney, not licensed in New Jersey, to represent them in negotiating a remedy with their lenders to avoid foreclosure proceedings. Although the attorney negotiated a settlement agreement, Plaintiffs learned shortly thereafter that she had failed to investigate and discover a $12,000 tax lien which had accumulated on their primary residence during the time the lender held title to the property. Plaintiffs were eventually forced to file a Chapter 13 bankruptcy to avoid a tax foreclosure on their home and sued their former attorney for malpractice.
Issue: Can a New York attorney be sued for professional negligence in New Jersey even though she was never required to appear in New Jersey to handle the matter?
Ruling: Yes. If the defendant attorney is able to show they she had no territorial presence in New Jersey, plaintiff is then required to demonstrate the necessary "minimum contacts" to exercise in personam jurisdiction:
So long as a commercial actor’s efforts are purposefully directed towards residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.
In this regard, the Court noted that the defendant attorney commenced negotiations in New Jersey, communicated regularly with Plaintiffs in New Jersey, and the final settlement agreement was executed in New Jersey:
Most significantly, defendant’s activities were purposefully directed at New Jersey residents and directly impacted New Jersey real property, which was the subject of litigation in New Jersey courts.
The Court further noted that the exercise of in personam jurisdiction in New Jersey would place no special burden on a New York attorney since the two states are contiguous. Moreover, the exercise of long arm jurisdiction was necessary to shield New Jersey citizens from unauthorized practice of law within its borders. See R.P.C. 5.5(b)(3)(iii): Non New Jersey lawyers may participate in mediation in New Jersey only for existing clients and only if the dispute originates in or is otherwise related to a jurisdiction in which the lawyer is admitted to practice.
Lesson: Non New Jersey lawyers are subject to professional negligence suits in New Jersey in the event the matter substantially relates to a New Jersey resident or New Jersey property and plaintiff is able to establish minimum contacts. Lack of territorial presence is not a determinative factor.
Posted in: New Jersey