UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
December 13, 1982
MIJE ASSOCIATES, Plaintiff,
HALLIBURTON SERVICES, et al., Defendant
The opinion of the court was delivered by: KNAPP
MEMORANDUM & ORDER
WHITMAN KNAPP, D.J.
This is a diversity action. Plaintiff -- a New York partnership
-- invested monies in developing oil and gas wells in Kentucky. It sues three defendants on allegations of negligence or professional malpractice, in that they failed properly to drill certain wells, causing thereby a diminished oil yield and, thus, monetary damage.
Two defendants -- Halliburton Services and Edmund Nosow -- move to dismiss for lack of personal jurisdiction.
As to Halliburton, it has been established that it is a corporation registered with the Secretary of State of the State of New York pursuant to § 210 of New York's Business Corporation Law. See Supplemental Affidavit of Herbert Adler [docket entry #15]. Accordingly, the motion is denied as to it.
Defendant Nosow was retained as a geologist to supervise development of the wells. It is alleged that he "carelessly and negligently supervised the drilling . . . and failed to use that degree of care which a reasonably prudent professional . . . would have used . . . ." Complaint para. 23. Plaintiff invites us to sustain jurisdiction under subdivision 3 of CPLR 302(a).
We decline that invitation.
In short, the specific question before us is whether, considering the pleadings and affidavits "in the light most favorable to plaintiff", Rios v. Marshall, (S.D.N.Y. 1981) 530 F. Supp. 351, 367 (citing cases), facts "may exist", Fantis Foods, Inc. v. Standard Importing (1980) 49 N.Y.2d 317, 325, 425 N.Y.S.2d 783, 786, 402 N.E.2d 122, to establish that Nosow's negligence caused plaintiff an injury "WITHIN THE STATE" within the meaning of CPLR 302(a)(3). We answer that question in the negative.
Efforts to establish a rule to fix the "situs of the injury" in cases where commercial damages -- rather than physical injuries -- are alleged, are complicated by the fact that such torts are "not the type which . . . section [302(a)(3)] was primarily designed to cover . . . ." American Eutectic Welding Alloys Co. v. Dytron Corp. (2d Cir. 1971) 439 F.2d 428, 432. Accord Zoellner Corp. v. Tex Metals Co. (2d Cir. 1968) 396 F.2d 300, 302. The American Eutectic court, however, adopted the well-known formulation that in the sphere of commercial torts, the situs of the injury is "the place where the critical events associated with the dispute took place." Id. at 433 (quoting Spectacular Promotions Inc. v. WING (E.D.N.Y. 1967) 272 F. Supp. 734, 737 (Weinstein, J.)).
Whatever be the "critical events" that allow us to determine the situs of a commercial injury, it is altogether clear that plaintiff's New York domicile -- in and of itself -- is not such a "critical event." This principle has been illustrated for a variety of commercial torts by decisions which declined to assert personal jurisdiction under CPLR 302(a)(3) over defendants alleged to have engaged in out-of-state tortious conduct causing injury "in" New York solely because plaintiff (or plaintiff's bank account) was located in the state. See, e.g., Zoellner Corp. v. Tex Metals Co., supra, 396 F.2d 300 (conversion); American Eutectic Welding Alloys Co. v. Dytron Corp., supra, 439 F.2d 428 (unfair competition) (citing cases); Data Communication, Inc. v. Dirmeyer (E.D.N.Y. 1981) 514 F. Supp. 26 (tortious inducement to breach contract) (citing cases); Dogan v. Harbert Construction (S.D.N.Y. 1980) 507 F. Supp. 254 (misrepresentation); Louis Marx & Co. v. Fuji Seiko Co., (S.D.N.Y. 1978) 453 F. Supp. 385, 388 n.4 (Weinfeld, J.) (conversion and unfair competition) (dictum); G.S.C. Assoc., Inc. v. Rogers (E.D.N.Y. 1977) 430 F. Supp. 148 (diversion of business); Sales Arm, Inc. v. Aut. Club of S. Cal. (S.D.N.Y. 1975) 402 F. Supp. 763 (dictum); Weiss v. Greenburg (App.Div. 1981) 85 A.D.2d 861, 446 N.Y.S.2d 447 (malpractice) (citing cases).
We know of no decision suggesting that the requirement of "injury to person or property within the state" could be satisfied by a negligence committed wholly outside the state which causes monetary damage to a New York citizen. We decline to be the first court making such an expansive ruling.
The foregoing compels the dismissal of the complaint against Nosow. The injury to the partnership -- lost future income -- which allegedly resulted from Nosow's negligent supervision, was caused in Kentucky where "the critical events associated with the [negligent supervision] took place." It is of no importance for jurisdictional purposes that the financial consequences of the mishap may be felt in New York because the partners live here.
Halliburton's motion to dismiss is denied; its other motions are denied as premature. Complaint dismissed -- on jurisdictional grounds and without prejudice -- as to defendant Nosow.