Back

The act of registering a business in New York in compliance with the Business Corporation Law does not constitute consent to the exercise of general jurisdiction by New York courts

New York

,

USA

You Can Be Served, but You Can't Be Sued In Aybar v. Aybar, 2021-05393 (N.Y. Oct. 7, 2021), the Court of Appeals of New York dealt with the question of whether a foreign corporation’s act of registering to do business in New York State constituted consent to the exercise of general jurisdiction by New York courts. Case History In Aybar, a New York resident was driving in Virginia when a Goodyear tire on their Ford car allegedly failed. The alleged tire failure resulted in a car accident that killed three of the passengers in the car and injured three other passengers. The plaintiffs (the estates of the passengers who died in the accident and the surviving injured passengers) sued Ford and Goodyear.Ford and Goodyear each moved to dismiss the complaint against them pursuant to CPLR 3211(a)(8) on the ground that New York courts lacked personal jurisdiction over the defendants. The plaintiffs opposed the motions for dismissal, arguing that by registering to do business in New York and appointing an in-state agent for service of process, Ford and Goodyear, both foreign corporations, knowingly consented to the general jurisdiction of New York courts.At trial, the Supreme Court, Queen’s County concluded that New York courts could exercise general jurisdiction over Ford and Goodyear. On appeal, the Appellate Division, Second Department reversed the Supreme Court’s ruling and granted Ford and Goodyear’s motions to dismiss the complaint. Court of Appeals Affirms Appellate Division The New York Court of Appeals affirmed the ruling of the Appellate Division.The Court of Appeals explained that the Business Corporation Law sets forth the steps that a foreign corporation must take to obtain authorization to do business in New York. These statutory provisions of the Business Corporation Law § 1301 require that a foreign corporation register and designate an in-state agent for service of process in order to do business in New York (at 5-6). However, the Business Corporation Law does not condition the right to do business on consent to the general jurisdiction of New York courts or otherwise afford general jurisdiction to New York courts over foreign corporations that comply with the conditions of the Business Corporation Law (at 6).Accordingly, a foreign corporation’s registration to do business and designation of an agent for service of process in New York does not constitute consent to general jurisdiction under the Business Corporation Law (at 6).

April 14, 2022
Aybar v. Aybar, 2021 NY Slip Op 05393 (N.Y. Oct. 7, 2021)
New York Courts