Rulings on Lack of Personal Jurisdiction and Forum Non Conveniens Normally Require a Discovery Record

Rippon v. Smigel, 449 N.J. Super. 344 (App. Div. 2017).  This opinion by Judge Haas today reverses a dismissal that was based on lack of personal jurisdiction, forum non conveniens, and res judicata.  The main reason was the state of the motion record, which Judge Haas labeled as “sparse,” “thin,” and “meager.”  The lesson of this decision is that discovery is generally required in order to make an adequate record on which a court can decide a motion to dismiss for lack of personal jurisdiction or forum non conveniens.

Defendant Smigel and his Pennsylvania law firm (also a defendant) represented defendant Caylene Rippon in a divorce case and two other matters against her husband, plaintiff H. James Rippon.  At the same time, the law firm was representing a business that he and Caylene owned jointly.  Plaintiff alleged that the law firm was in fact protecting only the interests of Caylene in that matter, to the detriment of plaintiff.

Plaintiff sued Smigel and the law firm in Pennsylvania for breach of fiduciary duty. As part of a stipulation that also addressed certain issues involving Caylene, who was not a party to the Pennsylvania suit, plaintiff agreed to withdraw his claim against Smigel and the law firm.  Plaintiff then sued Smigel, his firm, and Caylene in New Jersey (the case that today’s opinion involved).  The case asserted tortious interference and other claims in connection with plaintiff’s attempt to purchase a property in Stone Harbor, NJ for himself.

Defendants filed motions to dismiss, based on failure to state a claim, lack of personal jurisdiction, and forum non conveniens.  Smigel and the firm also asserted res judicata, based on the dismissal of the Pennsylvania breach of fiduciary duty action.  The Law Division granted dismissal.  That court found that there was neither general nor specific jurisdiction over Smigel or his firm (Caylene, a New Jersey citizen, did not win on the jurisdiction argument), that forum non conveniens mandated dismissal as to all defendants, and that res judicata applied in favor of Smigel and the law firm.  On plaintiff’s appeal, the Appellate Division reversed.

Judge Haas first addressed the personal jurisdiction issue.  The de novo standard of review applied to this question of law, though factual findings regarding jurisdiction had only to be supported by “substantial, credible evidence in the record.”

After summarizing the law on personal jurisdiction, Judge Haas noted that Smigel’s certification that was the basis for the lack of jurisdiction motion by him and the firm stated that he did not live in New Jersey and that his firm did not “regularly” provide legal services or perform other transactions in New Jersey.  But he did not define “regularly,” meaning that his certification “can be read as a concession that the firm is engaged in the practice of law in New Jersey to some unexplained degree.”  Plaintiff should have been allowed to take jurisdictional discovery to flesh out the activities of the law firm in New Jersey.  It was at best premature to grant the motion to dismiss on jurisdictional grounds.

The Law Division had also cited the fact that Smigel “merely sent one piece of correspondence” to New Jersey entities relating to plaintiff’s effort to buy the Stone Harbor property.  But Judge Haas cited cases “stating that a non-resident defendant can be subject to this state’s specific jurisdiction based on a single tortious act committed by the defendant in New Jersey.”  On remand, the Law Division was to consider Smigel’s letter is one part of the overall picture.

The decision on forum non conveniens was likewise premature, and the Law Division did not make adequate factual findings to support its ruling in this regard.  Forum non conveniens is a fact-intensive decision, as Judge Haas explained, and findings are essential.  Given that the Stone Harbor property was in New Jersey, Carlene lived in New Jersey, Smigel sent his letter to New Jersey entities, and the law firm did at least some business in New Jersey, discovery was needed before a court could conclude that New Jersey was not a convenient forum.  Quoting D’Agostino v. Johnson & Johnson, Inc., 115 N.J. 491 (1989), Judge Haas said that a decision on forum non conveniens is “enhanced”  when it is “reserved until discovery has proceeded sufficiently to enable the [trial] court to make a better-informed assessment of the private- and public-interests” that guide a ruling on forum non conveniens.

Finally, the Law Division’s application of res judicata was erroneous for two reasons.  First, the stipulation withdrawing the Pennsylvania breach of fiduciary duty was not a valid final judgment on the merits.  It was merely a withdrawal of the claim that did not purport to bar a suit on the separate Stone Harbor property purchase issue.  Second, the Stone Harbor issue “did not arise out of the same transaction or occurrence in the Pennsylvania action,” as required for res judicata to apply.  Accordingly, the matter was remanded for further proceedings.