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Jurisdiction: Property in NJ Snags NY Closing Attorney for Malpractice

First American Title Ins. Co v. Jordan W. Kapchan,  Superior Court of NJ App Div. Docket No. A-5953-08T2 (decided April 12, 2010)

NJ Underlying mortgage loan

Facts: Plaintiff title insurer from California,  had to pay out $150,000 to 5 intended payees of mortgage proceeds—all from outside NJ, who did not receive payment from mortgage closing related to NJ property. Title Insurer now sues its closing attorney for not following closing instructions. The closing attorney was located in New York. He was not admitted to practice in NJ, had no office in NJ and did not solicit business in NJ. There was no physical loan closing in NJ. The loan proceeds were deposited by the California mortgage lender into the closing attorney’s trust account in NY and was disbursed by the closing attorney from NY. The NY closing attorney sent the mortgage for recordation in Mercer County, NJ to the title agency, which was in NJ.
The trial court dismissed for lack of personal jurisdiction over the NY attorney.
The Appellate Division reversed and found that NJ had personal jurisdiction over the NY attorney.

ISSUE: How little must a NY closing attorney do to be subject to suit for legal malpractice in NJ?


The NJ property “itself, provides a very tangible and central nexus between [the NY closing attorney] and the State of New Jersey.” 

The only other NJ contact was that the NY lawyer mailed the marked up title binder, the HUD-1 and the mortgage for recordation to the title agency in NJ. And that was all done from NY.

LESSON: The case shows how  truly “minimal” the out-of-state closing attorney’s contacts with the State of NJ needs to be and how very long NJ’s jurisdictional arm can be. Other issues to be decided: Choice of law. Will the NY lawyer’s conduct be measured by NY or NJ standards? Will the California title insurer be entitled to recover consequential damages such as its attorney’s fees and litigation expense under Saffer v. Willoughby or will the law of some other state apply?

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Posted in: New Jersey, Real Estate