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Defunct Philadelphia law firm Wolf Block’s corporate registration in New Jersey and its acceptance of service there for a malpractice suit against it did not give a New Jersey court jurisdiction to hear the case, the Appellate Division has ruled.
The decision is the first published case in a New Jersey court to apply the U.S. Supreme Court’s latest rulings on general jurisdiction, including Bristol-Myers Squibb v. Superior Court of California, said Stephen Orlofsky, the lawyer representing Wolf Block in the case.
The appeals court, in a published decision, affirmed a trial judge’s ruling dismissing the suit by a Florida company represented by Wolf Block in a deal to purchase land in West Virginia. Although the firm had some connections to New Jersey, the alleged negligence forming the basis of the plaintiff’s suit did not arise from the firm’s contacts with the state, and no relationship can be shown between the suit and the firm’s New Jersey connections, the appeals court said in Dutch Run-Mays Draft v. Wolf Block.
Wolf Block, a dissolved Pennsylvania limited partnership, once had two New Jersey offices, but all its offices were shuttered when partners voted to dissolve the firm in March 2009, the appeals court said. But when Dutch Run-Mays Draft first filed its complaint in 2014, Wolf Block still had its business registration and registered agent, the panel said.
Judges Marie Lihotz, Richard Hoffman and Mary Gibbons Whipple affirmed a decision below finding a lack of jurisdiction to hear the case, finding, “mere registration to do business and acceptance of service of process in this state, absent more, does not bestow our courts with general jurisdiction.”
The suit stems from the purchase by Dutch Run, a real estate developer of 5,000 acres of land in Greenbrier County, West Virginia, in 2004 for the purpose of constructing multimillion-dollar homes. But after closing, Dutch Run learned that other parties owned subsurface mineral rights on the land, making it unsuitable for residential development. Dutch Run, a company formed solely for the purpose of buying the land, was represented by Wolf Block real estate partner Henry Miller. Miller joined Cozen O’Connor after the dissolution of Wolf Block, and he died in February 2010.
Dutch Run filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. District Court for the Southern District of Florida on Sept. 30, 2011.
Dutch Run first filed its malpractice suit against Wolf Block in the Philadelphia Court of Common Pleas in January 2014. But the plaintiff failed to prosecute the case and voluntarily withdrew it on May 29, 2014. It subsequently moved to reinstate the case but that motion was denied on March 12, 2015.
Meanwhile, Dutch Run filed a one-count malpractice suit against Wolf Block in Camden County Superior Court in July 2014. The case was dismissed in March 2015 because Dutch Run failed to obtain an authorizing order for the U.S. Bankruptcy Court, in violation of a statute requiring a debtor to obtain an order before hiring attorneys to perform post-petition services outside its ordinary course of business.
On April 13, 2015, the Bankruptcy Court gave its OK to the Wolf Block suit, and on June 15, 2015, the Law Division granted Dutch Run’s motion to reinstate its complaint.
Wolf Block moved to dismiss the case, and Dutch Run opposed the motion, arguing that when the alleged malpractice took place, the firm had multiple partners living in New Jersey. Wolf Block produced documents to demonstrate that the firm’s work on the West Virginia land purchase was not undertaken or billed from its New Jersey offices. In addition, Wolf Block argued that Miller was not admitted to practice law in New Jersey, no meetings related to the land purchase took place there, and only two phone calls were placed from Philadelphia to New Jersey that related to the transaction. Superior Court Judge Louis Meloni of Camden County dismissed the case for lack of jurisdiction.
Dutch Run appealed, and Wolf Block argued jurisdiction was not established under the U.S. Supreme Court’s 2014 ruling in Daimler AG v. Bauman, which calls for a focus on an entity’s affiliation with a state, such as the place of incorporation or a continuous course of business. Wolf Block also noted that the Supreme Court reaffirmed and clarified the limits of a state’s ability to exercise jurisdiction over foreign corporations in two decisions this year, BNSF Railway v. Tyrrell and Bristol-Myers Squibb v. Superior Court of California.
The panel agreed, saying that reliance on Wolf Block’s business registration to establish general jurisdiction “is belied by the holding set forth in Daimler‘s clear narrow application of general jurisdiction. A plaintiff must show more than that the defendant engaged in some business or complied with corporate registration requirements of the forum,” Lihotz wrote for the panel.
Orlofsky, of Blank Rome in Princeton, said he considered the malpractice claims against Wolf Block to be without merit. Wolf Block never filed an answer in the Dutch Run suit, but if the case had proceeded in Philadelphia, or if the New Jersey court had found it had jurisdiction, “there would have been a serious statute of limitations problem” for the plaintiff.
The lawyer for Dutch Run, Jonathan O’Boyle of the O’Boyle Law Firm in Johnstown, Pennsylvania, said he believes the Appellate Division may have misapplied the Daimler AG decision, and he is considering an appeal to the state Supreme Court.